§ 40.07 REFUNDING OF DEBT.
   The city will refund debt when it is in the best financial interest of the city to do so.
   (A)   Debt service savings. When a refunding is undertaken to generate interest rate savings, the minimum aggregate present value savings will be 3% of the refunded bond principal amount.
   (B)   Restructuring. Refunding to restructure debt will be limited to restructuring to alleviate debt service during difficult budgetary years, achieve cost savings, mitigate irregular debt service payments, release reserve funds or remove unduly restrictive bond covenants.
   (C)   Term of refunding issues. The city will refund bonds within the term of the originally issued debt. However, the city may consider maturity extension, when necessary to achieve a desired outcome, provided that such extension is legally permissible. The city also may consider shortening the term of the originally issued debt to realize greater savings. The remaining useful life of the financed facility and the concept of inter-generational equity should guide this decision.
   (D)   Escrow structuring. The city shall utilize the least costly securities available in structuring refunding escrows. A certificate will be provided by a third-party agent stating that the securities were procured through an arms-length, competitive bid process (in the case of open market securities), and that the price paid for the securities was reasonable within federal guidelines. Under no circumstances shall an underwriter, agent or financial advisor sell escrow securities to the city from its own account.
   (E)   Arbitrage. The city shall take all necessary steps to optimize escrows and to avoid negative arbitrage in its refunding. Any resulting positive arbitrage will be rebated as necessary according to federal guidelines.
(1984 Code, § 40.07) (Ord. O-07-19, passed 3-26-2019)