Title
Conduct a public hearing and consider approving an ordinance on first and final reading with the caption reading: ORDINANCE AUTHORIZING THE ISSUANCE OF CITY OF PFLUGERVILLE, TEXAS, LIMITED TAX AND REFUNDING BONDS, SERIES 2016; 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; CALLING CERTAIN OBLIGATIONS FOR REDEMPTION AND AUTHORIZING OTHER MATTERS RELATED TO THE BONDS.
Summary
The issuance of these bonds will be used for street and park projects authorized by citizens in the 2014 and 2015 bond elections and to refund existing City debt. This is the second issuance related to the 2014 election, including approximately $10.5 million for street projects ($28 million authorized and a first issuance of $10 million) and approximately $18.5 million for parks projects ($25 million authorized and a first issuance of $2 million). This is the first issuance related to the 2015 election, including approximately $2.93 million for street projects. After this issuance, $18.75 million of authorized but unissued debt will remain, approximately $7.5 million for streets 2014 election, $4.5 million for parks 2014 election, and $6.6 million for streets 2015 election.
Current market conditions appear favorable to redeem certain bonds and refinance the outstanding principal at a lower interest rate. Currently, the City's Financial Advisor estimates that $15.8 million of existing debt can be refinanced. 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 savings calculated on market rates on that day.
The attached ordinance has been prepared by bond counsel. The pricing terms of the bonds will be finalized and incorporated into the ordinance on June 28th after the obligations have been priced. Moody's Investor Services and S&P Global Ratings have both assigned ratings on this debt issuance. Moody's has maintained the City's A1 rating and S&P has maintained the City's AA rating.
Mr. Spencer Day with Hilltop Securities, the City's financial advisor, and Mr. Bart Fowler with McCall, Parkhurst, and Horton, City's bond counsel, will be in attendance to answer any questions that City Council may have.
Prior City Council Action
On June 14, 2016, the City Council approved a draft of the Preliminary Official Statement.
Deadline for City Council Action
Approval of this ordinance will allow for the issuance of bonds and for the City to receive funds on July 27, 2016.
Fiscal Impact
The bonds have been structured so that the first payment, interest only, is due in February 2017 and the first principal and interest payment is due in August 2018. 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 roadway and parks general obligation (limited tax) bonds would equate to an additional 3.12¢ on the ad valorem rate in fiscal year 2017, increasing to an estimated total 4.48¢ for this bond issue beginning in fiscal year 2018. Any refunding debt issued would be paid from existing debt service allocations and would reduce future debt service payments.
Staff Recommendation
Conduct the public hearing and consider the ordinance on first and final reading to Award Sale of Bonds.
Drafter
Lauri Gillam
Assistant City Manager