In 2005, the School District entered into 2 forward swaptions (options to enter into swaps).  The transactions simulated an advance refunding (refinancing) of the two COP issues and allowed the District to receive a payment equal to the estimated present value savings of the refunding.  For the two transactions, the District received $10,490,000.  These funds were placed in the Board Contingency within the General Fund.

The transactions included an option that, if exercised, would require the District to enter into floating-to-fixed interest rate swaps.  In the event the option was exercised, it was contemplated the District would issue variable rate COPs in 2011 and 2012, which, when combined with the interest rate swap, would result in payments approximately matching the current lease payment schedule.  

In 2011, the School Board issued the 2011B in association with the first forward starting swaption.

The 2012B transaction is associated with second and last forward starting swaption.

The new debt issue will replace the 2002D COP issue. 

This Resolution delegates authority to the Superintendent to negotiate the terms with the swap counterparty and terminate all or a portion of the swap if possible without increasing the net debt service payments of the debt issue.  

This resolution also delegates authority to the Superintendent to negotiate the terms of sale of 2012B COPS with one or more bank or underwriting firm based on the best terms and conditions included in bids received.  The Resolution also authorizes the execution and delivery of all instruments and documents necessary to complete the transaction.

The Finance Committee reviewed the transaction at many meetings since 2005.  The committee approved the transaction at their meeting on April 10, 2012.  

Leanne Evans, Treasurer (leanne.evans@palmbeachschools.org)

The expected cost of issuance of the debt is $300,000 if issued as a privately placed floating rate note based on the bids received.  If issued as a publicly offered fixed rate issue, the expected cost of issuance is $1,100,000 including fees paid to the underwriting firms. Regardless of how the refunding COPs are issues, the costs will be included in the debt issue.