BRADENTON, Fla. - Charlotte, N.C., plans to ask the Local Government Commission Tuesday to approve a $498 million debt financing plan that includes a general obligation bond referendum next month.
Charlotte will ask the LGC, which reviews borrowing proposed by local governments, to authorize $252 million in new revenue and refunding bonds, a $100 million direct placement, and to put a $146 million GO bond request on the Nov. 4 ballot for various public improvements.
If the city receives approval from the LGC, $352 million in bonds will be sold this month.
A $117 million stormwater bond deal expected to price Wednesday includes a $70.5 million new money component to accelerate financing for some projects, said city treasurer Scott Greer.
The city anticipates that the stormwater bonds will be very popular with investors, Greer said
The $45.9 million refunding portion of the deal is expected to provide present value savings of $7.2 million or 16.1% of refunded par. The amount could vary depending on market conditions.
The stormwater bonds have been rated Aa1 by Moody's Investors Service and AAA by Standard & Poor's. Both have stable outlooks.
Wells Fargo Securities and Bank of America Merrill Lynch are underwriting the stormwater deal. DEC Associates Inc. is financial advisor. Parker Poe Adams & Bernstein LLP is bond counsel, and underwriters counsel is McGuireWoods LLP.
Charlotte also plans to price $135 million in tax exempt general airport revenue refunding bonds for city-owned Charlotte Douglas International Airport on Oct. 16, Greer said.
The airport deal will be structured with $95 million of refunding bonds and $40 million subject to the alternative minimum tax. The airport refunding bonds will be underwritten by Bank of America Merrill Lynch and Wells Fargo. The FA is DEC Associates. Parker Poe and McGuireWoods are bond and underwriters' counsel.
The combined present value savings on the airport refunding bonds is expected to be $17 million or 13.9% of refunded par amount.
Moody's has assigned an Aa3 rating to the airport refunding bonds, with a stable outlook.
Simultaneously with the airport refundings, the city is entering a new $100 million draw-down note program also subject to the AMT with a direct bank placement at PNC Capital Markets LLC.
The drawdown program, which was sought in a competitive process after reviewing a number of options for short-term financing, allows the city to forego liquidity remarketing costs, save on interest rate costs, and risk compared to commercial paper and floating-rate note programs, according to Greer.
"We look at different options every time we're working on a financing, and try to take a reasonable approach to what's the most efficient way to do it," he said. "The drawdown program is more flexible, very competitive and it's simple."
The PNC loan will allow the airport to finance new projects and reimburse itself for cash-funded projects already undertaken, said Greer.
The drawdown notes are expected to be outstanding for up to two years, and used as cash flow needs require. There is no fee for any undrawn notes, which the city expects to retire in 2017 with permanent financing.
The notes will finance all or portions of costs related to a new business valet parking deck, rehabilitation of certain passenger areas, a three-level addition to the east terminal, expansion of a runway ramp, and other improvements.
