If approved, the issuance of tax notes would be for the purpose of paying contractual obligations to be incurred for (i) for the purchase of materials, supplies, equipment and machinery for authorized needs and purposes, including communication and technology equipment (ii) professional services rendered on behalf of the City in relation to such projects.

Motorola has indicated that they will no longer support the maintenance of the City's current radio technology. Upgrading radio equipment throughout the City (the majority of which is related to Public Safety) will cost approximately $1.9 million. By issuing tax notes, the City will be able to upgrade the radio system city-wide and will be able to take advantage of current pricing from Motorola which is unlikely to remain at current levels for an extended period of time.

The interest rates today are at all-time lows. This, coupled with the timing of the refunding of bonds, makes issuing tax notes a more financially attractive option compared to other 3rd party financing. The anticipated interest rates for the tax notes range from .70% to .99%. The tax notes have a three-year amortization period.

The sale is expected to be conducted on August 16th. The closing is scheduled for September 13th. The ordinance authorizing the issuance of the tax notes is attached for approval by the City Council. The ordinance sets the form, details of, and authorizes the issuance and delivery of the tax notes. It also provides for the levy and collection of annual tax for the payment of the principal and interest for the Tax Notes Series, Series 2016.

Also attached is the Paying Agent/Registrar agreement with Bank of New York Mellon.

Depending on the final interest rates, the debt payment associated with the issuance of tax notes in a par amount of approximately $2,000,000 is expected to be an annual amount of approximately $820,000 in principal and interest for Fiscal Year 2017, and approximately $610,000 for 2018 and 2019. The debt payments will begin in 2017 and are structured to have a final maturity in August 2019. The bond amount and debt payments are consistent with the long range financial plan of the City.

Staff recommends approval of the Ordinance authorizing the issuance of the tax notes and the Paying Agent/Registrar agreement with Bank of New York Mellon.

I make a motion to approve Ordinance No.__________ authorizing the issuance of Tax Notes, Series 2016 and the Paying Agent Registrar agreement with Bank of New York Mellon.