Posting Language
Title
Approve an ordinance authorizing a Letter of Credit and Reimbursement Agreement with Sumitomo Mitsui Banking Corporation related to the City's Hotel Occupancy Tax Subordinate Lien Variable Rate Revenue Refunding Bonds, Series 2008; and authorizing the execution and delivery of related agreements and fees.
De
Lead Department
Financial Services Department.
Fiscal Note
This item has no fiscal impact.
For More Information:
Belinda Weaver, Treasurer, 512-974-7885.
Additional Backup Information:
In 2008, the City issued its Hotel Occupancy Tax Subordinate Lien Variable Rate Revenue Refunding Bonds, Series 2008 (Bonds) for the purpose of refunding the previously issued 2005 variable rate obligations in order to split the structure into a Subseries A and Subseries B, each supported by a separate liquidity facility. A bank liquidity facility is a necessary component of any variable rate demand obligation, such as the Bonds. The liquidity facility is provided in the form of a Letter of Credit (LOC). The LOC serves two functions: first, to provide liquidity support for the Bonds in the event that tendered bonds cannot be remarketed; and second, as a guarantee should the City be unable to make debt service payments. The City would be obligated to reimburse the LOC provider(s) for all draws made on the LOCs. The current LOCs for each subseries expire in October 2024.
This Council request, if approved, will allow the City of Austin to extend the expiring Subseries 2008B LOC with Sumitomo Mitsui Banking Corporation (SMBC) and replace the expiring Subseries 2008A (currently held with UBS AG) with SMBC. The fee associated with extending the LOC is proposed at 57 basis points by SMBC.
In addition to the ongoing LOC fees, there will be certain one-time costs associated with execution of this LOC execution. The estimated total for the one-time fees is $350,000 and will be paid to the following entities acting in the capacity noted:
...
Click here for full text