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DAVENPORT & COMPANY <br />To Lee County Board of Commissioners <br />From Davenport Public Finance <br />Date November 9, 2015 <br />Subject Potential Certificates of Participation Refunding Transaction <br />Background <br />023 <br />Davenport Public Finance <br />1o1 N. Tryon Street <br />Suite 1220 <br />Charlotte, NC 28246 <br />Davenport & Company LLC ("Davenport") reviews the County's debt portfolio on a regular basis for potential <br />refinancing opportunities and coordinates with staff to evaluate potential refinancing opportunities. As part <br />of our weekly review, Davenport and staff have identified a potential refunding opportunity to achieve debt <br />service savings associated with the County's Certificates of Participation, Series 2006 ("2006 COPs"). <br />In December 2006, the County issued $28,355,000 Certificates of Participation to fund a new middle school, <br />construct a multi-purpose room at Floyd L. Knight School, construct and equip a 26 acre Tramway Road Park, <br />renovate and repair facilities at Central Carolina Community College, and install a new roof at the Dennis A. <br />Wicker Civic Center. The 2006 COPs are secured by Southern Lee High School and Sanlee Middle School on <br />a parity basis with the County's Refunding Certificate of Participation, Series 2012. In order to assist in the <br />marketing the 2006 COPs, a bond insurance policy was acquired from FSA. The 2006 COPs have current <br />interest rates ranging from 4.0% - 5.0% and are callable at anytime beginning on April 1, 2017 with no <br />prepayment penalty. <br />Current Municipal Market Rates <br />For an extended period of time, <br />municipal market rates have been at 8.0% <br />or near 25 -year lows (as shown in 7.5% <br />the chart to the right) but have also 7.0% <br />demonstrated periods of extended 6.5% <br />volatility. These absolute low levels 6.0% <br />of interest rates have created 5.5% <br />refinancing opportunities for issuers 5.0% <br />of municipal bonds. 4.5% <br />4.0% <br />3.5% <br />3.0% <br />O `LCD'0 b O `L R 0 4� <br />o o o a o o o o o <br />Bond Buyer 20 -Bond Index <br />oy\tio oti�y`Loti�,y� <br />—20 -Bond Index —Average Since 1990 —Current <br />Member NYSE I FINRA I SIPC Page 1 <br />