To: Mark R. Hafner, City Manager
From: Aaron Rector, Director of Administrative Services
Subject:
Title
Consideration and action regarding a resolution directing publication of notice of the City's intention to issue combination tax and revenue certificates of obligation to provide funds for water and sewer system improvements and related issuance costs, and resolving other matters related to the subject.
Action Requested:
Consider a resolution to publish the notice of intention (NOI) to issue Certificates of Obligations for the second round of State Water Implementation Fund (SWIFT) funds for $4,060,000.
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 SWIFT.
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 is required to publish notice of its intent to issue CO's. The notice must be published 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.
If a petition protesting the issuance of the CO's is signed by 5% of the registered voters of the City prior to the adoption of the ordinance and issuance of the CO's, the City may not proceed with the CO issuance unless the CO's are authorized in an election.
Financial Impact:
The CO’s will be a fifteen year obligation with an estimated annual debt service payment of $300,000 and payments will begin in FY 2020-21. The City intends to issue the third and final SWIFT CO in FY 2020-23.
Citizen Input/Board Review:
Not Applicable
Legal Review:
Bond counsel has prepared the notice of intent resolution.
Alternatives:
City Council has the following alternatives:
- Approve as submitted
- Approve with changes
- Denial
Council Action:
Consider approval of resolution as presented.