Title
Conduct a public hearing and consider action to approve an ordinance on first and final reading with the caption reading: Sixth Supplemental Ordinance to the Master Ordinance Establishing the City of Pflugerville, Texas Utility System Revenue Financing Program Authorizing the Issuance of the City’s Utility System Revenue Bond (City of Pflugerville Master Program - Water and Wastewater CIP Tranche 1).
Summary
Water Treatment Plant expansion, Weiss Lane/Pecan Street water line and pump station expansion and 42” raw water line are multi-year projects anticipated to be completed by FY27. The total project cost is currently estimated at $425.6M. The project will be funded from multiple sources with $76.9M through the Texas Water Development Board (TWDB), $156.5M through WIFIA (Water Infrastructure Finance and Innovation Act) to be authorized by this item, $52M through WIFIA loan entered into in 2022 and the remaining $140.1M through certificates of obligation.
This ordinance approves the issuance of a loan from the United States Environmental Protection Agency (EPA) under the federal WIFIA program in a principal amount up to $156,528,628 which is evidenced by a bond in that amount that will be held by EPA. The bond is payable from a pledge of the net revenues of the City’s water and wastewater utility system after the payment of operating and maintenance expenses with the same payment priority as the City’s outstanding utility revenue bonds held by TWDB and the EPA.
This ordinance also approves a Master Loan Agreement with EPA to facilitate the execution of future WIFIA loans up to $438,202,066 (including the current WIFIA loan authorized by this item). All future WIFIA loans under the Master Loan Agreement would still require future City Council approval.
In accordance with EPA rules, the interest rate on the WIFIA loan is set on the morning of closing based on the United States Treasury Direct SLGS Daily Rate published that date. The scheduled closing date for the WIFIA loan is Tuesday, October 15, 2024. The City’s 2022 WIFIA loan was the first loan under the program closed in the State of Texas, and this 2024 WIFIA loan will be the second. As required by EPA, the ordinance waives the City’s sovereign immunity from suit with respect to its payment obligations on the WIFIA bond. The WIFIA loan will be drawn down in installments over time to reimburse the City for project cost expenditures and interest on the loan will only accrue on the principal amount of the loan that has actually been drawn down. The ordinance and the supporting loan documents have been reviewed by the Public Finance Division of the Texas Attorney General’s Office in anticipation of closing.
Deadline for City Council Action
Council action is required by October 15, 2024 to close the loan with WIFIA as scheduled.
Funding Expected: Revenue _x_ Expenditure N/A
Budgeted Item: Yes _x_ No N/A
Amount: $156,528,628
1295 Form Required? Yes No _x_
Legal Review Required: N/A Required _x_ Date Completed: 10/1/2024
Supporting documents attached:
6th Supplemental Ordinance
WIFIA Loan Agreement (as an exhibit to the Ordinance)
Term Sheet (as an exhibit to the Ordinance)
Paying Agent/Registrar Agreement (as an exhibit to the Ordinance)
WIFIA Master Loan Agreement (as an exhibit to the Ordinance)
Recommended Action
Staff recommends approval of the ordinance on first and final reading with the caption reading: Sixth Supplemental Ordinance to the Master Ordinance Establishing the City of Pflugerville, Texas Utility System Revenue Financing Program Authorizing the Issuance of the City’s Utility System Revenue Bond (City of Pflugerville Master Program - Water and Wastewater CIP Tranche 1).