Legal Documents of Dandridge

The town administrator and finance director, in conjunction with professionals, if any, shall have the responsibility to analyze outstanding debt for refunding opportunities. The decision to refinance must be explicitly approved by board of mayor and aldermen, and all plans for current or advance refunding of debt must be in compliance with state laws and regulations. The town administrator and finance director will consider onerous restrictions, restructuring for economic purposes, term, escrow saving, and arbitrage when analyzing possible refunding opportunities.

1. Onerous restrictions. Debt may be refinanced to eliminate onerous or restrictive covenants or restrictions contained in existing debt documents.
2. Restructuring for economic purposes. The town may also refund debt when it is in its best financial interest to do so. Such a refunding will be limited to restructuring to meet unanticipated revenue expectations, achieve cost savings, mitigate irregular debt service payments, release reserve funds, or any other reason approved by board of mayor and aldermen in its discretion.
3. Term of refunding issues. Normally, the town will refund debt equal to or within its existing term. However, the town administrator and finance director may consider maturity extension, when necessary to achieve desired outcomes, provided that such extension is legally permissible and it is approved by the board of mayor and aldermen. The town administrator and finance director may also consider shortening the term of the originally issued debt to realize greater savings. The remaining useful economic life of the financed facility and the concept of inter-generational equity should guide these decisions.
4. Escrow structuring. The town shall utilize the least costly securities available in structuring refunding escrows. In the case of open market securities, a certificate will be provided by a third party agent, who is not a broker-dealer stating that the securities were procured through an arms-length, competitive bid process, that such securities were more cost effective than State and Local Government Obligations (SLGS), and that the price paid for the securities was reasonable within federal guidelines. In cases where taxable debt is involved, the town administrator and finance director, with the approval of bond counsel, may make a direct purchase as long as such purchase is the most efficient and least costly. Under no circumstances shall an underwriter, agent or any professionals sell escrow securities involving tax-exempt debt to the town from its own account.
5. Arbitrage. The town shall consult with persons familiar with the arbitrage rules to determine applicability, legal responsibility, and potential consequences associated with any refunding. The town shall take all necessary steps to optimize escrows and to avoid negative arbitrage in its refunding. Any positive arbitrage will be rebated as necessary according to federal guidelines. (Ord. #11/12-08, Nov. 2011)