Title: Approve Constant Maturity Swap

Recommendation:

I recommend the School Board adopt a Resolution authorizing a Constant Maturity Swap for the Certificates of Participation, 2002D in an aggregate principal amount not to exceed $100,000,000. 

Description:

·         This Resolution delegates authority to the Superintendent to negotiate the terms of the transaction with the swap counterparty within the parameters set forth in the Resolution.  The Resolution also authorizes the execution and delivery of all instruments and documents necessary to complete the transaction.

·         The CMS takes advantage of the fact that the interest rates for a 5 or 10 year transaction are very similar to that of a one month transaction. 

·         If the transaction becomes effective in the current interest rate environment, the transaction would slightly reduce the savings currently enjoyed from the Basis Swap that was implemented in 2002.  The savings are expected to increase to an average of $600,000 per year as the spread between short and long term interest rates increase to more normal levels.

·         The Finance Committee reviewed the transaction and unanimously approved it at their meeting on July 27, 2006. 

Financial Impact:
Based on historical data, the completion of the transaction should result in annual revenues ranging from $1,574,045 to ($317,662) with an average of $600,000.  The proceeds/costs of the transaction will be applied to the debt service budget.

For Additional Information, contact:
Joseph Moore (jmoore@palmbeach.k12.fl.us)

Attachments (list):
Executive Summary CMS.pdf