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HomeMy WebLinkAboutOrdinance 24805-04-2021ORDINANCE NO. 24805-04-2021 AN ORDINANCE INCREASING ESTIMATED RECEIPTS AND APPROPRIATIONS IN THE WATER AND SEWER (OPERA TING) FUND IN THE AMOUNT OF $500,000.00, SUBJECT TO THE SALE OF THE BONDS AND RECEIPT OF PROCEEDS, FOR THE PURPOSE OF PAYING COST OF ISSUANCE RELATED TO THE REFUNDING BONDS, WITH SUCH AMOUNT SUBJECT TO REDUCTION TO CONFORM TO FINAL FIGURES REFLECTED IN BOND CLOSING DOCUMENTS WITH ANY EXCESS COST OF ISSUANCE FUNDS REMAINING AFTER CLOSING BEING TRANSFERRED TO THE DEBT SERVICE FUND, PROVIDING FOR A SEVERABILITY CLAUSE; MAKING THIS ORDINANCE CUMULATIVE OF PRIOR ORDINANCES; REPEALING ALL ORDINANCES IN CONFLICT HEREWITH; AND PROVIDING AN EFFECTIVE DATE. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS: SECTION 1. That in addition to those amounts allocated to the various City departments for Fiscal Year 2020-2021 in the Budget of the City Manager, there shall also be increased estimated receipts and appropriations in the Water and Sewer (Operating) Fund in the amount of $500,000.00, subject to the sale of the bonds and receipt of proceeds, for the purpose of paying cost of issuance related to the Refunding Bonds, with such amount subject to reduction to confom1 to final figures reflected in bond closing documents with any excess cost of issuance funds remaining after closing being transfened to the debt service fund. SECTION 2. That should any portion, section or part of a section of this ordinance be declared invalid, inoperative or void for any reason by a court of competent jurisdiction, such decision, opinion or judgment shall in no way impair the remaining portions, sections, or parts of sections of this ordinance, which said remaining provisions shall be and remain in full force and effect. SECTION 3. That this ordinance shall be cumulative of Ordinance 24446-09-2020 and all other ordinances and appropriations amending the same except in those instances where the provisions of this ordinance are in direct conflict with such other ordinances and appropriations , in which instance said conflicting provisions of said prior ordinances and appropriations are hereby expressly repealed. SECTION 4. This ordinance shall take effect upon adoption. APPROVED AS TO FORM AND LEGALITY: ~,.{'lft,f/ Assistant City Attorney ADOPTED AND EFFECTIVE: April 13, 2021 Mary J. Kayser City Secretary City of Fort Worth, Texas Mayor and Council Communication DATE: 04/13/21 M&C FILE NUMBER: M&C 21-0262 LOG NAME: 13SERIES 2021 WATER SEWER REVENUE REFUNDING & IMPROVEMENT BOND SUBJECT (ALL) Adopt Attached Thirty-Seventh Supplemental Ordinance Authorizing Issuance of C ity of Fort Worth , Texas Water and Sewer System Revenue Refunding and Improvement Bonds , Series 2021 , in an Aggregate Principal Amount Not to Exceed $170 ,745 ,000 .00, Establishing Parameters with Respect to the Sale of the Bonds, Delegating to Designated City Officials Authority to Effect the Sale of Bonds , and Enacting Other Provisions Relating to the Subject, Adopt Attached Amended and Restated Thirty-Second Supplemental Ordinance, which Mirrors the Prior Thirty-Second Supplement but Extends the Term of Delegated Authority and Makes Minor Conforming Changes ; and Adopt Attached Appropriation Ordinances RECOMMENDATION: It is recommended that the City Council : 1. Adopt the attached thirty-seventh supplemental ordinance (i) authorizing the issuance of City of Fort Worth , Texas Wate r and Sewer System Revenue Refunding and Improvement Bonds , Series 2021 , in an aggregate principal amount not to exceed $170,745,000.00 , (ii) approving the sale of the bonds subject to meeting certain parameters being met, (iii) delegating to designated City officials authority to effect the sale ; (iv) approving execution of an agreement for the retirement of the refunded obligations, if any, and other instruments related to the issuance of the bonds, (v) providing for the establishment of rates and collection of revenues sufficient to pay the principal and interest on said bonds ; and (vi) enacting other provisions related thereto ; 2. Adopt the attached ordinance increasing estimated receipts and appropriations in the Water and Sewer Revenue Bonds Series 2021 Fund by $128 ,000,000 .00 , subject to the sale of bonds and receipt of proceeds , for the purpose of funding capital improvements and paying the costs of issuance , with such amount subject to reduction to conform to final figures reflected in bond closing documents and with any excess cost of issuance funds remaining after closing being transferred to the water and sewer debt service fund ; 3 . Adopt the attached ordinance increasing estimated receipts and appropriations in the Water Prior Lien Debt Service Fund in the amount of $44,000,000.00 , subject to the sale of the bonds and receipt of proceeds , for the purpose of funding the required escrow to refund existing debt, with such amount subject to reduction to conform to final figures reflected in bond closing documents; 4 . Adopt the attached ordinance increasing estimated receipts and appropriations in the Water and Sewer Fund in the amount of $500 ,000.00 , subject to the sale of the bonds and receipt of proceeds, for the purpose of paying cost of issuance related to the refunding bonds, with such amount subject to reduction to conform to final figures reflected in bond closing documents and with any excess cost of issuance funds remaining after closing being transferred to the water and sewer debt service fund ; and 5 . Adopt the attached amended and restated thirty-second supplemental ordinance , which mirrors the prior thirty-second supplement in (i) authorizing issuance and sale of City of Fort Worth, Texas Water and Sewer System Revenue Refunding Bonds in an aggregate principal amount not to exceed $150 ,000 ,000 .00 to allow outstanding commercial paper to be refunded/refinanced if needed , (ii) approving the sale of the bonds subject to certain parameters being met, (iii) authoriz ing instruments related to the issuance of the bonds , (iv) providing for the establishment of rates and collection of revenues sufficient to pay the principal and interest on said bonds , (v) waiving the provision in the Financial Management Policy Statements that outlines the revenue debt of the City shall generally have an average life of approximately seventeen-to-eighteen years, and (vi) extending the delegated authority to affect the sale of refunding bonds through May 31 , 2022 . DISCUSSION: The purpose of this Mayor and Council Communication (M&C) is to adopt ordinances associated with revenue-based debt financing of infrastructure for the City's Water and Sewer System. The actions include authorizing bonds for system improvements and to refinance existing Water and Sewer debt obligations to achieve a net savings (Thirty-Seventh Supplement), extending standby refunding authority to facilitate the System's Commercial Paper (CP) program (Amended and Restated Thirty-Second Supplement), and adopting associated appropriation ordinances . Thirty-Seventh Supplement The first four recommendations relate to the thirty-seventh supplemental ordinance , which authorizes issuance and sale of up to $170,745,000 .00 in Water and Sewer system revenue refunding and improvement bonds, in one or more series, for the purpose of (i) extending and improving the system, (ii) refinancing existing Water and Sewer debt obligations to achieve net savings, and (iii) paying the costs of issuance of the bonds , and to the appropriation of the bond proceeds. The proposed debt transaction includes $126,800,000.00 in new money to fund capital projects in alignment with the Water Department's Capital Improvement Program with the balance of the debt proceeds to be used to refund other debt to achieve savings . It is the City's practice to achieve positive debt service savings through refinancing when the opportunity presents itself. Staff and the City's Co- Financial Advisors Hilltop Securities and Estrada Hinojosa, are recommending the callable Series 2011 Water and Sewer System Revenue Bonds be refunded, with a par amount outstanding of $43 ,045 ,000 .00. The actual savings amount will not be determined until the time bids are received . However, in accordance with the City's Financial Management Policy Statements, the ordinance provides that the refunding debt shall not be sold unless the sale will result in net present value savings of at least 3 .50 percent of the par amount be ing refunded . Currently , the refund ing is p rojected to provide 12 .10 percent net present value savings, or $5 ,241 ,776 .00 . In 1991 , the City adopted a master ordinance establ ishing a Water and Sewer System Revenue Financing Program for the Water Departmen t. Each time the Water Department issues debt , a supplemental ordinance must be adopted which contains details specific to the debt being issued . This issuance would be the thirty-seventh supplemental ordinance since the master ordinance was adopted . The ordinance provides delegated authority to the C ity Manager and Chief Financial Officer, ind ividually , to effect the sale of the bonds . Staff is recommending that these bonds be sold through a competitive bid sale with the City Manager or the Chief Financial Officer being authorized to approve the terms of the sale so long as it comes within the parameters set forth in the Council-adopted ordinance. Key parameters include : bonds must be rated in one of the four highest generic rating ca tegories (BBB or higher); the maximum maturity is February 15 , 2051 ; and the ma xi mum net effective interest rate is 3.25 percent. Rating agency calls w ith Fitch and S&P will be conducted prior to the sale of the bonds with the bonds expected to be offered for sale approximately two weeks after rat ings are received . Subsequent to the pricing and awarding the sale of the bonds , the City will seek approval of the debt transactions from the Texas Attorney General with an estimated closing date approximately one month after the award of sale. The attached appropriation ordinances reflect the maximum appropriation amount for bond proceeds for each of the identified purposes . The ordinances' structure accommodates variables associated with sale of debt under delegated authority such as the uncertain final interest rate to be achieved and the possib ility of a prem ium or discount being associated with the sale of the bonds . To the extent numbers at closing are less than those reflected in each of the ordinances , the available appropriation amount will be reduced as needed to reflect final figures based on the closing documents to ensure appropriations do not exceed actuals . Similarly, to the extent there are any remaining proceeds after pay ing cost of issuance expense , those funds are to be moved to the Water Prior Lien Debt Service Fund . Amended and Restated Thirty-Second Supplement This M&C also adopts an amended and restated thirty-second supplemental ordinance , which provides the officials identified and designated as pricing officers with the authority to issue up to $150,000 ,000.00 in Water and Sewer revenue refunding bonds if needed to facilitate the system's CP program. As approved by the City Council in December 2017 , the CP program authorizes up to $150,000,000 .00 in short-term commercial paper for the Water and Sewer System to be outstanding at any time (M&C C-28496). Although it is not anticipated that commercial paper would actually be issued very regularly, the program authority provides the Water Department with liquidity and contracting authority so that it can efficiently design and commence capital projects tha t are ultimately planned to be financed out of longer term debt to be issued at a later date . As the program is structured , an issue of commercial paper cannot have a maturity that is later than the 270th day after the date on which the paper is initially issued . The thirty-second supplemental is an integral part of the CP program because it provides delegated authority that allows refunding bonds to be issued , within certain parameters , in the unlikely event that commercial paper is actually issued and cannot otherwise be retired or remarketed by the 270th day. The thirty-second supplemental ord inan ce was initially adopted by M&C C-28496 and previously amended and restated (M&Cs G-19266 , G- 19531 , and M&C 20-0224 ). Among the parameters the ordinance sets for issuance of Water and Sewer revenue refunding bonds is that the bonds bear a "net effective interest rate" (as defined in and calculated in accordance with the provisions of Chapter 1204, Texas Government Code) that is no greater than 10.00 percent. In accordance with the practice of the Texas Attorney General , the prior versions of the thirty-second supplemental ordinance provided delegated authority that would expire a year after the ordinance (original or restated) was adopted . Adoption of the attached amended and restated version of the thirty-second supplemental ordinance extends the delegated authority of the pricing officers to effect sale of all or any portion of up to $150 ,000 ,000.00 in revenue refunding bonds through May 31 , 2022 . Prior restated versions of the thirty- second supplemental ordinance incorporated minor changes reflecting the impact of federal tax law changes on advance refunding and adding to the list of events that require disclosure under federal securities regulations . Because ongoing au thority to issue refunding bonds is needed for proper operation of the CP program, a newly amended and restated thirty-second supplemental ordinance will be needed on an annual basis to extend the period of delegated authority . Staff anticipates bringing forward an amended and restated thirty-second supplemental ordinance each year as part of the City's annual debt issuance process . A Form 1295 is not required because : This M&C does not request approval of a contract with a business entity. FISCAL INFORMATION/ CERTIFICATION: The Director of Finance certifies that upon approval of the above recommendations and adoption of the attached appropriation ordinances , the sale of the 202 1 Water and Sewer System Revenue and Refunding Bonds will occur as required under the parameters set forth therein and that funds will be available in the Water Prior Lien Debt Service Fund and the W&S Rev Bonds Series 2021 Fund to record the appropriate and necessary transactions. Pursuant to the recommended actions , appropriation authority up to $150 ,000 ,000 .00 will be restored in the W&S Commercial Paper Fund. Prior to any expenditures being incurred , the Water Department has the responsibility to validate the availability of funds. Submitted for City Manager's Office by: Jay Chapa 5804 Originating Business Unit Head: Reginald Zeno 8517 Additional Information Contact: Alex Laufer 2268