To: Mark R. Hafner, City Manager
From: Aaron Rector, Director of Administrative Services
Subject:
Title
Consider adoption of an ordinance authorizing the issuance and sale of City Of Keller, Texas Combination Tax and Surplus Revenue Certificates of Obligation, Series 2023, to provide funds for water system improvements and for related issuance costs; levying an annual ad valorem tax and providing for the security for and payment of such certificates; providing an effective date; and enacting other matters and provisions relating to the subject.
Action Requested:
Consideration and action regarding an ordinance authorizing the issuance and sale of 2023 SWIFT bonds for water system improvements and for related issuance costs.
Background:
On July 21, 2016, the City received notification from the Texas Water Development Board (TWBD) for approval of the $12,180,000 financial assistance request through the State Water Implementation Fund (SWIFT). The proposed ordinance is for the third and final issuance of $4,060,000 and would be a fifteen year certificate of obligation. Based upon final numbers received from the Texas Water Development Board, the City would pay an approximate true interest cost of 2.95% for a total of $918,995 in interest payments for the life of the bond.
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 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.
Traditionally, when the City issues certificates of obligation, the certificates are authorized by the City Council and ultimately sold through a competitive bidding process. This issuance will not be competitively bid because the TWDB funding requires private placement. By Using the TWDB funding, the bonds are offered at a rate below market.
The City was required to publish notice of its intent to issue CO's twice in consecutive weeks, with the date of the first publication being at least 30 days prior to the scheduled date of adoption of the ordinance authorizing issuance of the CO's. The publication was posted Fort Worth Star Telegram on August 25, 2023 and September 1, 2023. No petition protesting the issuance of the CO’s has been received at this time.
Financial Impact:
The FY 2022-23 estimated annual payment was $321,911 which was included in the budget and rate calculations. The actual annual payment will be $334,041.
Citizen Input/Board Review:
Not applicable.
Legal Review:
Bond counsel has prepared the ordinance.
Alternatives:
City Council has the following alternatives:
- Approve as submitted
- Approve with changes
- Denial
Council Action:
Consider approval of ordinance as presented.