To: Mayor and City Council
From: Aaron Rector, Interim City Manager
Subject:
Title
Consider adoption of an ordinance authorizing the issuance and sale of City of Keller, Texas Combination Tax and Limited Surplus Revenue Certificates of Obligation, Series 2024, to provide funds for street improvements and for related issuance costs; levying an annual ad valorem tax and providing for the security for and payment of such certificates; approving the Official Statement; providing an effective date; and enacting other matters and provisions relating to the subject.
Action Requested:
Consider adoption of an ordinance authorizing the issuance and sale of City of Keller, Texas Combination Tax and Limited Surplus Revenue Certificates of Obligation, Series 2024, to provide funds for street improvements and for related issuance costs; levying an annual ad valorem tax and providing for the security for and payment of such certificates; approving the Official Statement; providing an effective date; and enacting other matters and provisions relating to the subject.
Background:
The certificate of obligations (COs) issuance would be for an amount not to exceed $15,000,000 and will fund the Elm street reconstruction project. The proposed COs will be paid from ad valorem and has been included in the current tax rate. The COs will be issued as fifteen-year debt obligations. The anticipated asset life of the projects is anticipated to be at least twenty years which complies with the City’s financial policy requirement that debt obligations not exceed the asset life. The proposed debt structure fits within the City’s long-term financial plans and needed for long-term debt capacity management.
The debt has been rated as AAA by both Moody’s and Standard & Poor’s.
In addition to the City’s debt issuance, Tarrant County has pledged $7.6 million to the project.
Financial Impact:
FY 2023-24 budget included an estimated annual payment of $1,420,817 for the proposed debt based upon an issuance of $15,000,000 at 4.75% interest rate. The first proposed issuance payment will be in FY 2024-25 for $1,714,617. However, future payments will generally be lower with an average payment of $1,314,909.
Legal Review:
Bond Counsel has prepared the ordinance.
Alternatives:
City Council has the following alternatives:
- Approve as submitted
- Approve with changes
- Denial
Council Action:
Staff recommends approval as presented.