Title
Conduct a public hearing and consider approving an ordinance on first reading with caption reading: ORDINANCE AUTHORIZING THE ISSUANCE OF CITY OF PFLUGERVILLE, TEXAS, LIMITED TAX REFUNDING BONDS, AUTHORIZING THE LEVY OF AN AD VALOREM TAX IN SUPPORT OF THE BONDS; APPROVING AN OFFICIAL STATEMENT, A PURCHASE AGREEMENT, AN ESCROW AGREEMENT AND A PAYING AGENT/REGISTRAR AGREEMENT; AUTHORIZING CERTAIN OBLIGATIONS TO BE CALLED FOR REDEMPTION; ESTABLISHING PROCEDURES FOR SELLING AND DELIVERING THE BONDS AND AUTHORIZING OTHER MATTERS RELATED TO THE BONDS.
Summary
Current municipal bond market conditions warrant the consideration of issuing refunding bonds to lower future debt service payments. The city is maximizing the refunding opportunities at this time by refunding all bonds that are callable. The bond issues being considered for refunding at this time: 1999 General Obligation Bonds (Justice Center, roads, parks); 2002 Combination Tax and Revenue Certificates of Obligation (streets, parks, Colorado River Project); 2003 Combination Tax and Revenue Certificates of Obligation (police communications, Colorado River Project, wastewater interconnect); 2003-A Combination Tax and Revenue Certificates of Obligation (Colorado River Project, wastewater interconnect); and the 2004 Combination Tax and Revenue Certificates of Obligation (Colorado River Project, wastewater interconnect, Lake Pflugerville park, Wells Branch and Pflugerville Parkway East). The ordinance provides for the following parameters:
* minimum overall net present value debt service savings of 7% of the principal amount of the refunded obligations (net of any City contribution);
* maximum aggregate principal amount of the refunding bonds of $65,000,000;
* maximum maturity date of the refunding bonds of August 1, 2035;
* purchase price of the refunding bonds cannot be less than 90% of their principal amount (excluding the underwriters' discount);
* all outstanding ad valorem tax debt of the City that is eligible to be refunded is being proposed for this refunding;
* delegation to price the refunding bonds is made to the City Manager; and
* delegation to price the refunding bonds within these parameters is effective until 5:00 p.m. on April 24, 2013.
The current estimated percentage of debt service savings provided by FirstSouthwest is 9.773319%. As stated above, should the net savings fall below 7% at the time of the proposed issuance of the refunding bonds, the refunding will not be done at this time. The estimated amount of debt service savings is $7,874,511.26 over a 21-year maturity. All bonds in this refunding will be paid off before their original maturity dates. Allocation of the savings will be General Fund - 26%; Water - 45%; and Wastewater - 29%.
The City's financial advisor and bond counsel will be in attendance to answer any questions the City Council may have.
Refunding bonds only require one public hearing and one reading of the ordinance.
Deadline for City Council Action
In order to take advantage of the current market conditions, approval of the ordinance is requested at this time. The attached schedule shows the anticipated bond sale in June. This is the only City Council action that is required for this refunding.
Fiscal Impact
The effects of the savings will be shown on the General Fund and Utility Fund pro formas that will be considered during the fiscal year 2013 budget process.
Staff Recommendation
Conduct the public hearing and approve the ordinance.
Drafter
Lauri Gillam
Assistant City Manager