Title
Conduct a public hearing and consider an ordinance on first and final reading with the caption reading: AMENDED AND RESTATED ORDINANCE AUTHORIZING THE ISSUANCE OF CITY OF PFLUGERVILLE, TEXAS COMBINATION TAX AND LIMITED REVENUE CERTIFICATES OF OBLIGATION, SERIES 2016B; AUTHORIZING THE LEVY OF AN AD VALOREM TAX AND THE PLEDGE OF CERTAIN NET REVENUES IN SUPPORT OF THE CERTIFICATES; APPROVING AN OFFICIAL STATEMENT, A PURCHASE AGREEMENT AND A PAYING AGENT/REGISTRAR AGREEMENT; AND AUTHORIZING OTHER MATTERS RELATED TO THE CERTIFICATES.
Summary
During the June 28, 2016 City Council meeting, an ordinance was approved for the issuance of these certificates of obligation to reimburse the developer for projects completed in the Tax Increment Reinvestment Zone (TIRZ.) Three other debt issuances were approved at the June 28 meeting and do not require additional action.
The day the City's bonds were sold was a very unusual day in the municipal market, as the City was one of the first entities to sell bonds following the unexpected outcome of Britain's vote to exit the EU (Brexit.) The fluctuating market created a circumstance that resulted in the par total of the issuance and the premium exceeding the maximum not-to-exceed amount of $6,300,000 as had been specified in the Notices of Intent action by City Council on May 10, 2016. The Attorney General was unable to approve the bonds that exceeded the published maximum.
The CIty's financial advisor and bond counsel have advised that in order to correct this overstatement of issuance, principal amounts need to be eliminated from the 2016B transaction so the resulting par and net premium total is less than the stated maximum amount of issuance. City Council action on the first and final reading of the ordinance tonight will approve the reduction of the principal necessary to comply with the stated maximum amount of $6,300,000. Since the city charter mandates a public hearing when issuing debt, a public hearing has also been included on the agenda.
Since this debt was issued for TIRZ reimbursements, this action has no financial effect on the City. The original estimate for the developer reimbursement provided in May was $6,060,000. As a result of the approval of this ordinance authorizing the issuance, the developer will receive $6,298,116.
This is the first reimbursement to the developer for TIRZ projects. The City will be issuing approximately $2.5 million in future debt to complete the reimbursement to the developer at such time that the TIRZ increment is sufficient to fund additional debt.
Mr. Richard Donoghue, the City's bond counsel, will be at the meeting to answer any questions.
Prior City Council Action
On May 10, 2016, the City Council approved a Notice of Intent Resolution for this issuance of Certificates of Obligation, Series 2016B. On June 14, 2016, the City Council approved a draft of the Preliminary Official Statement. On June 28, 2016 the City Council approved the issuance of the Combination Tax and Limited Revenue Certificates of Obligation Servies 2016B.
Deadline for City Council Action
In order to close on the bonds and receive the funds by July 27, 2016, this public hearing must be held and the ordinance must be adopted on July 26, 2016.
Fiscal Impact
The TIRZ related bonds will not affect the City's property tax rate as those certificate of obligation bonds will be funded by the annual TIRZ increment.
Staff Recommendation
Conduct the public hearing and consider the ordinance on first and final reading to award sale of certificates.
Drafter
Lauri Gillam
Assistant City Manager