Board Agenda - May 15, 2007

o. Order approving and authorizing the execution of a substitute Standby Bank Bond Purchase Agreement relating to Variable Rate Unlimited Tax School Building Bonds, Series 1997

Presenter: Richard Matkin

Purpose: A - Request decision - closure required

Time: No time limit

Description:

The District's Series 1997 Variable Rate Bonds are supported by a Standby Bond Purchase Agreement with Helaba. The current agreement was entered into in 2002 for a five year term and expires on June 17, 2007. The original agreement was with Union Bank of Switzerland and was entered into in conjunction with the Bonds in 1997.

First Southwest Company solicited bids from Helaba and nine other banks to provide the necessary liquidity support for the Bonds. Under the current agreement, Helaba receives 0.16% of the outstanding principal amount of bonds plus eligible interest. Under the proposed Agreement with Dexia Credit Local, the fees will be 0.0925% of the outstanding principal amount plus eligible interest. While the District has reserved the right to terminate the agreement, it is anticipated that the Dexia agreement will remain in effect until the Bonds are paid off in 2017.

Dexia is a highly rated bank (Aaa/AA/AA+), and First Southwest has advised that making this bank substitution will result in similar interest rates on the Bonds. The Order presented to the Board for consideration authorizes the execution of the Standby Bond Purchase Agreement with Dexia and certain specific amendments to the original 1997 bond order that make conforming changes. Bond Order and Draft of Bond Purchase Agreement is attached.

Recommendation:

The Administration recommends the approval of the order authorizing the execution of a substitute Standby Bank Bond Purchase Agreement with Dexia Credit Local.

Business Impact:

The estimated annual savings to the District associated with this change is approximately $29,000 annually. The upfront costs associated with making this change are approximately $63,000. Savings and fees associated with the agreement will be funded by the Debt Service Fund.

Summary:

Appendix:

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