MEMORANDUM

TO: Pete Sprague, Assembly President

Members, Kenai Peninsula Borough Assembly

THRU: Dale Bagley, Borough Mayor

FROM: Jeffrey Sinz, Finance Director

DATE: July 24, 2003

SUBJECT: South Peninsula Bond Sale Resolution

The attached resolution authorizes the issuance of $10,500,000 in General Obligation School Bonds through the Alaska Municipal Bond Bank Authority. A majority of Service Area borough residents voting in the July 1, 2003 special election approved issuance of up to $10,500,000 in general obligation bonds for capital improvements associated with the South Peninsula Hospital.

The bonds are expected to be sold in late September or October. The resolution authorizes the borough Mayor, Finance Director or Acting Finance Director and Clerk to execute the documents and agreements necessary to complete the sale. The resolution limits the term of the bonds to twenty years and the interest rate to no more than 5%. Based on current interest rates for tax-exempt municipal debt, it is anticipated that the true interest rate of the bonds will be between 4.0 and 4.5%. The actual rate of interest is subject to market conditions that exist on the date of the sale.

A draft of the "loan agreement" referenced in the resolution is attached for your information.

Because of the size of this issue, circumstances may cause us to reconsider the method of issuance from a bond bank sale to an independent borough sale. If this occurs, a follow-up resolution will be presented to the assembly to authorize the change. I will keep the assembly informed as we progress through the bond issuance process.