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City Council Regular Meeting
Danville-Pittsylvania Regional Industrial Facility Authority - Refinancing of Cane Creek Bonds
Business Meeting: 06/18/2019
Danville-Pittsylvania Regional Industrial Facility Authority (RIFA) financed development of the Cane Creek Industrial Park with Series 2016 Taxable Revenue Refunding Bond, placed at Wells Fargo Bank; the bonds mature on August 1, 2019. Patrick Dixon, Senior Vice-President with Wells Fargo Bank, has offered the purchase of taxable bonds to refinance this debt.
The bonds were originally issued in 2005 as variable rate financing in the amount of $7.3 million. In 2013, refunding bonds were issued in the amount of $5.595 million. In 2016, refunding bonds were again issued in the amount of $3.7 million. The 2016 bonds mature on August 1, 2019 with a remaining principal balance of $2.595 million.
Wells Fargo Bank has offered a 65-month term with a fixed interest rate. This will be the last refunding bond issue for this debt, as the remaining principal will be paid in full at the end of this term. The fixed rate will be the Wells Fargo Cost of Funds Rate plus 1.5%, which currently would be equivalent to a borrowing rate of 3.95%. As with the original indebtedness, the amortization schedule continues to be based on a final maturity of January 1, 2025.
As in the past, the City and Pittsylvania County will need to continue the previous moral obligation in the form of Support Agreements. This does not add to the City's existing moral obligation; it will simply replace the existing Support Agreement and extend it to cover the remaining life of this debt.
The RIFA board met on May 13, 2019, and passed a resolution to proceed with this refinancing, but will need renewed support agreements from the City Council and Pittsylvania County Board of Supervisors to compete the refinancing.
It is recommended that City Council approve the Support Agreement, enabling RIFA to complete the refinancing of the 2016 Bonds.
Wells Fargo Term Sheet
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