Title
Approving a resolution with the caption reading: RESOLUTION APPROVING PRELIMINARY OFFICIAL STATEMENT AND AUTHORIZING DISTRIBUTION OF SUCH PRELIMINARY OFFICIAL STATEMENT RELATING TO THE CITY'S COMBINATION TAX AND LIMITED REVENUE CERTIFICATES OF OBLIGATION, SERIES 2016A, SERIES 2016B, TAXABLE SERIES 2016C AND LIMITED TAX AND REFUNDING BONDS, SERIES 2016.
Summary
This resolution is the next step in the process of issuing debt. The City will be issuing certificates of obligation (CO) of up to $9.38 million for roadway, park and facility projects and acquisition of land and police software (see list attached), Series A; certificates of obligation of up to $6.3 million to reimburse the developer for TIRZ projects, Series B; and, a taxable certificate of obligation issuance of up to $1.6 million to reimburse City for TIRZ projects, Series C.
In addition, up to $31.875 million of general obligation (limited tax) bonds will be issued for street and park projects authorized by citizens in the 2014 and 2015 bond elections. The issuance related to the 2014 election includes $10.5 million for streets and $18.5 million for parks. The portion of the issuance related to the 2015 election includes $2.93 for street projects. After this issuance, $18.75 million of authorized but unissued debt will remain, approximately $7.5 million for streets 2014 election, $4.6 million for parks 2014 election, and $6.6 million for streets 2015 election. Further, current market conditions appear favorable to pay off certain previously issued bonds by refinancing the outstanding principal and obtaining a lower interest rate on the new debt. The decision whether or not to issue refunding bonds will be made at the time of the bond sale and will depend on the net present value calculated on market rates on that day. Currently, the Financial Advisor estimates that approximately $15.8 million of existing debt can be refinanced with limited tax refunding bonds. Information contained in the preliminary official statement is often structured on market conditions and therefore subject to change. Any differences reflected between the issuing numbers provided above and that included in the preliminary official statement reflect anticipated market conditions, which at this time appear favorable.
City staff, the City’s financial advisor and the City’s bond counsel have been revising the preliminary official statement which is the informational document that is sent to prospective investors. This resolution, prepared by bond counsel, will approve the preliminary official statement and authorize its distribution. A revised copy of the preliminary official statement was emailed to the City Council no later than Friday, June 10, 2016. A copy of the final official statement will be provided to each City Councilmember when it is complete.
Mr. Terrell Palmer, financial advisor and Mr. Richard Donoghue, bond counsel will be at the City Council meeting to answer any questions you may have.
Prior City Council Action
At the May 10, 2016 Council meeting, a resolution was approved to begin the process for issuing the Combination Tax and Limited Revenue Certificates of Obligation, Series 2016A, Series 2016B, and Taxable Series 2016C.
Deadline for City Council Action
To meet the deadlines established for closing the bonds and receiving funds on July 27, 2016, the preliminary official statement must be approved at this meeting.
Projected Future City Council Action
On June 28, 2016, a public hearing will be held and the sale of the bonds will be finalized.
A tentative financing schedule is attached to this agenda item.
Fiscal Impact
The bonds have been structured so that the first payment is due in February 2017 and the first principal payment is due in August 2018. The police software has been included in the CO issue on a 5 year payment schedule to more closely match the potential life of the asset. The estimated cost of this debt as it relates to the tax rate is calculated based on FY17 estimated assessed valuation information received from Travis Central Appraisal District and the proposed payment schedule provided by the financial advisor. The FY17 annual payment on the certificate of obligation bonds equates to approximately 0.91¢ of the estimated ad valorem tax rate, increasing to 1.92¢ with the full payment in fiscal year 2018. The roadway and parks general obligation (limited tax) bonds would equate to 3.12¢ on the ad valorem rate in fiscal year 2017, increasing to an estimated 4.48¢ beginning in fiscal year 2018. The TIRZ related bonds will not affect the City's property tax rate as those certificate of obligation bonds will be funded by TIRZ funds already set aside for that purpose. Any refunding debt issued would be paid from existing debt service allocations and would reduce future debt service payments.
Staff Recommendation
Approve the resolution.
Drafter
Lauri Gillam
Assistant City Manager