HomeMy WebLinkAboutIR 10015 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10015
To the Mayor and Members of the City Council June 6, 2017
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*a SUBJECT: FINAL RESULTS OF 2017A WATER AND SEWER REVENUE
rrn REFUNDING AND IMPROVEMENT BONDS
This informal report is intended to provide the Mayor and City Council with a summary of the
results from our Series 2017A Water and Sewer Revenue Refunding and Improvement bond
sale, which was completed on Tuesday, May 23, 2017. As shown in more detail below, the sale
resulted in a lower-than-anticipated true interest cost and present value savings that were more
than half a million dollars greater than projected.
Background
At a Work Session briefing on April 4th, staff presented the proposed Series 2017A debt
financing, including a new money issue and refunding. The City's proposed issuance included
refunding existing debt to take advantage of current market conditions to produce savings. The
issuance of new debt to generate funds for improvement occurred in alignment with our existing
capital improvement plans for the Water and Sewer System.
On May 9th, the Mayor and Council approved the 30th supplement bond ordinance authorizing
the sale of Water and Sewer System Revenue Refunding and Improvement Bonds, Series
2017A. The ordinance included parameters which required specific minimum savings to be
realized in order for the sales of refunding debt to be consummated.
The City offered the debt utilizing a competitive sale process with the assistance of our co-
financial advisors, FirstSouthwest, a Division of Hilltop Securities Inc., and Estrada Hinojosa &
Co. Results of the bond pricings are highlighted on the following pages.
Overview of Pricing
The City's Water and Sewer System issue (AA+/Aa1/AA) priced with an average life of 15.623
years and a True Interest Cost (TIC) of 3.33%. To summarize the transaction, the City sold a total
of $111 ,600,000 in bonds to fund various improvements to the Water and Sewer System totaling
$100,000,000 and to refinance the City's outstanding Series 2008 Water and Sewer bonds for
cash flow savings. The Series 2017A bonds were sold with a premium such that the total
proceeds generated was $120,877,978.
Bids were received from eight firms. The chart below depicts the firm and the associated true
interest cost:
Bidder TIC
Bank of America Merrill Lynch 3.3376%
Wells Fargo Bank, National Association 3.3636%
Frost Bank 3.3715%
Citigroup Global Markets Inc. 3.3734%
Hutchinson, Shockey, Erley & Co. 3.3928%
J.P. Morgan Securities LLC 3.3975%
Raymond James & Associates Inc. 3.4005%
Mesirow Financial Inc. 3.4045%
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10015
To the Mayor and Members of the City Council June 6, 2017
r� Page 2 of 2
�i
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*a SUBJECT: FINAL RESULTS OF 2017A WATER AND SEWER REVENUE
rrn REFUNDING AND IMPROVEMENT BONDS
Bank of America Merrill Lynch was the winning bid.
A summary of the final results compared to the original estimates is provided below:
Summary of May 9th Work Parameters Final Results
Financing Session
Results Projection
Total Issue Size $109,320,000 Not to Exceed $111,600,000
$120,000,000
New Money $100,000,000 Not to Exceed $100,000,000
Proceeds $100,000,000
Total Debt Service $1 ,122,267 $1 ,746,600
Savings
True Interest Cost 4.01% 3.33%
Net Present Value $879,981.28 More Than: $594,000 $1,535,886.34
(PV) Savings
PV Savings as % 4.44% More Than 3.00% 7.76%
of Refunded
Principal
If you have any questions, please call Aaron Bovos, Chief Financial Officer, at 817-392-8517.
David Cooke
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS