To: Mark R. Hafner, City Manager
From: Aaron Rector, Director of Administrative Services
Subject:
Title
Consider a resolution approving the execution and delivery of a Financing Agreement with the Texas Water Development Board regarding the issuance of certificates of obligation by the city for water system improvements and related issuance costs, and approving the obligations of the city with respect to such agreement; and resolving other matters relating to the subject.
Background:
In 2013, the 83rd Texas Legislature passed House Bill 4 and Senate Joint Resolution 1 providing for the creation of the State Water Implementation Fund (SWIFT) and the State Water Implementation Revenue Fund for Texas (SWIRFT). House Bill 1025 authorized a $2 billion supplemental appropriation from the state’s Economic Stabilization Fund, and Proposition 6, approved by voters on November 5, 2013, created a constitutionally dedicated fund. This investment and the financing program, referred to as the SWIFT program, was designed to support approximately $27 billion in funding for water supply projects over 50 years to assist communities in developing adequate water supplies during times of drought. The 2012 State Water Plan provided the analysis of water supply project needs, which served as the basis for initial SWIFT projections.
The SWIFT program is designed to encourage implementation of water plan projects through advantageous funding options such as: low-interest loans, extended repayment terms, repayment deferral, and incremental repurchase terms for projects with state ownership aspects. The program is leveraged through the issuance of SWIRFT revenue bonds and the appropriated funds are utilized to bridge the difference between the SWIRFT revenue bonds and the repayment options provided to TWDB’s underlying borrowers in the program.
On May 3, 2016, City Council approved a resolution for City staff to apply for the SWIFT funds. The City of Keller will use the funds to undertake an Enhanced Water Loss Control and Conservation Program to reduce water loss through leaks, pipe breaks and service lines. The City of Keller’s water distribution system consists of 200 miles of 2” to 12” water distribution piping. Approximately 5% of the distribution system is made up of AC pipe of which is more than 40 years old. These older pipes prove problematic in that the city is experiencing more and more leaks and pipe breakages. It is the city’s intent to replace approximately twelve (12) miles of deficient system pipe and approximately 1,600 deficient water services. The estimated total cost of these improvements, including engineering and bond issuance costs, is approximately $12,180,000.
On July 21, 2016, The TWDB approved the City’s request for financial assistance. A resolution is required to authorize the City Manager to enter into an agreement with the TWDB for the funding. The proposed financing agreement is related to the third of three SWIFT debt issuances. The SWIFT funds will be received in early FY 2023-24 and the related project and debt services costs are included in the proposed budget.
Financial Impact:
The CO’s will be a fifteen year obligation with an estimated annual debt service payment of $325,000 and payments will begin in FY 2023-24. This is the final issuance under the current financial assistance request.
Citizen Input/Board Review:
Not Applicable
Legal Review:
Bond counsel has prepared this financing agreement resolution.
Alternatives:
City Council has the following alternatives:
- Approve as submitted
- Approve with changes
- Denial
Council Action:
Consider approval of proposed resolution as presented.