HomeMy WebLinkAboutOrdinance 25473-04-2022 ORDINANCE NO.25473-04-2022
AN ORDINANCE INCREASING ESTIMATED RECEIPTS AND
APPROPRIATIONS IN THE GENERAL DEBT SERVICE FUND, IN THE
AMOUNT OF $169,000,000.00, SUBJECT TO THE SALE OF BONDS AND
RECEIPTS OF PROCEEDS, FOR THE PURPOSE OF FUNDING REQUIRED
ESCROW TO REFUND EXISTING DEBT AND PAYING COSTS OF ISSUANCE,
WITH SUCH AMOUNT SUBJECT TO REDUCTION TO CONFORM TO FINAL
FIGURES REFLECTED IN BOND CLOSING DOCUMENTS;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 2021-2022 in the
Budget of the City Manager,there shall also be increased estimated receipts and appropriations in the General
Debt Service Fund in the amount of$169,000,000.00, subject to the sale of bonds and receipts of proceeds,
for the purpose of funding required escrow to refund existing debt and paying costs of issuance, with such
amount subject to reduction to conform to final figures reflected in bond closing documents.
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 25073-09-2021 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said prior ordinances and appropriations are hereby expressly repealed.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: CITY SECRETARY
Jannette s.Goodall(Apr 14,202216:47 CDT)
Denis C. McElroy,Assistant City Attorney Jannette S.Goodall
10.
ADOPTED AND EFFECTIVE: April 12,2022 'l e
City of Fort Worth, Texas
Mayor and Council Communication
DATE: 04/12/22 M&C FILE NUMBER: M&C 22-0295
LOG NAME: 13SERIES 2022 GENERAL PURPOSE REF AND IMP BONDS(TAX EXEMPT)
SUBJECT
(ALL)Adopt Attached Ordinance Authorizing Issuance and Sale of City of Fort Worth,Texas General Purpose Refunding and Improvement Bonds,
Series 2022(Tax Exempt), in an Aggregate Principal Amount Not to Exceed$255,000,000.00; Establishing Parameters with Respect to Sale of
the Bonds; Delegating Authority to Effect Sale of the Bonds by Competitive Bid or Negotiated Sale;Authorizing Escrow and Other Related
Agreements;and Enacting Related Provisions;Adopt Attached Appropriation Ordinance;and Amend the Fiscal Year 2022 Adopted Budget
RECOMMENDATION:
It is recommended that the City Council:
1. Adopt the attached ordinance,which (i)authorizes the issuance of City of Fort Worth,Texas General Purpose Refunding and Improvement
Bonds,Series 2022(Tax Exempt), in an aggregate principal amount not to exceed$255,000,000.00,for the purpose of funding projects
within the 2018 bond program, refunding identified outstanding debt,and paying the costs of issuance for the bonds; (ii)delegates to
designated City officials authority to effect sale of the bonds-subject to certain parameters as set forth in the ordinance-by competitive bid
or negotiated sale as determined most advantageous based on current market conditions; (iii)authorizes execution of all related documents;
(iv)provides for levy,assessment,and collection of a property tax sufficient to pay the interest on and principal of the bonds if other revenues
are not otherwise available and appropriated for those payments; (v)waives the provisions in the Financial Management Policy Statements
that(A)provide that general obligation bonds of the City shall generally have an average life of approximately ten and one-half(10.5)years,
(B)limit debt refundings to those that result in a minimum net present value savings of 3.5 percent, (C)preclude structures involving
increasing debt service payments outside the first and second year,and(D)generally require commencement of principal payments
commence by the second fiscal year following debt issuance;and(vi)enacts other provisions related thereto;
2. Adopt the attached ordinance increasing estimated receipts and appropriations in the General Debt Service Fund in the amount of
$169,000,000.00,subject to the sale of bonds and receipts of proceeds,for the purpose of funding required escrow to refund existing
debt and paying costs of issuance,with such amount subject to reduction to conform to final figures reflected in bond closing documents;and
3. Amend the Fiscal Year 2022 Adopted Budget.
DISCUSSION:
The purpose of this Mayor and Council Communication(M&C)is to take actions associated with issuance and sale of tax-exempt Series 2022
General Purpose Refunding and Improvement Bonds and appropriation of proceeds. This action will allow refinancing and restructuring of existing
debt obligations, including tax notes issued for the Future City Hall project and City equipment such as fire apparatus,as well as provide additional
funding as part of the 2018 Bond Program Capital Improvement Program.
Adoption of the attached bond ordinance approves the issuance and sale of$83,165,000.00 in"new money"bonds from the 2018 Bond Program
for the purpose of constructing streets and public mobility improvements; park and recreation improvements;library system improvements;and fire
safety improvements,with the remaining balance of the proceeds to be used to pay cost of issuance and refund existing debt as further described
below.
The role of the current bond offering in the overall 2018 Bond Program is shown as follows:
Date of Amount 1 Amount Previously Amount Now Unissued
Pur ose
Election Authorized Sold Offered Balance
May 5,2018 $261,63 080 00 00 Streets&Mobility $154,400,000.00) $53,000,000.001 $54,230,080.00
May—5,2018 $84,180,600.00i Park& Recration e $46,000,000.00 $20,165,000.00 $18,015,600.0Oj
May 5,2018 11 $9,868,500.00 Library System J $0.0011 $5,000,000.00 $4,868,500.00
May 5,2018 $11,975,820.00j Fire Safety $4,000,00O.00j $5,000,000.00 $2,975,820.00J
I
May 5,2018 $13,770,000.001 Animal Care&Shelter $13,700,000.00i $0.00 $0.00
May 5,2018 $18,075,000.001 Police Facility i $15,000,00-0—.070 00
Because the City Council previously expressed the intent for the City to reimburse itself(Ordinance No.23209-05-2018)and appropriated funds to
provide interim financing for the 2018 Bond Program beginning with M&C G-19306(Ordinance 23263-06-2018), no appropriation ordinance is
needed for the new money part of this bond transaction.
The remainder of the proposed issuance is geared toward refunding and restructuring outstanding debt.
Staff and the City's co-financial advisors, PFM and TGL,are recommending the refunding of callable portions of the Series 2012 General Purpose
Bonds and Series 2012 Certificates of Obligation,with a combined par amount outstanding of$93,590,000.00. That portion of the transaction is
expected to achieve an estimated net present value savings of$4,319,690 or 4.61%.
The ordinance also allows for the possibility of refunding some or all of the callable portion of the Series 2022 Tax Notes,which will allow the City to
refund and restructure the debt by paying off the notes using funds obtained from new bonds at any date on or after April 6,2022. Staff originally
planned to refund the Tax Notes this summer to better align repayment of the debt with the useful life of the Future City Hall building.However,with
the Tax Notes bearing a true interest cost of 1.73%,the recent changes in interest rates have resulted in that plan being put on pause. If economic
conditions were to shift in the next few months and make it favorable to effect a refunding in a manner that minimizes that additional cost,then that
option may be exercised before the year ends. Because the delegated authority in the bond ordinance expires at the end of this year,a refunding
in or after 2023 would require further Council action.
Given the expectation that the tax notes may be paid off on their original seven-year maturity schedule,the financial advisors are recommending a
structure in which payment on the principal for the refunding portion of the bonds not commence until year nine,after the tax notes are fully repaid.
This approach would better preserve debt capacity but requires waiver of certain portions of the City's financial management policy statements
(FMPS)that generally preclude debt service payments increasing beyond the first and second year and that call for principal payments to generally
commence by the second fiscal year after debt is issued.
Due to current market conditions, public issuers are struggling to price favorably in the competitive market.In an effort to mitigate this downside
risk,the ordinance provides delegated authority to the City Manager and Chief Financial Officer, individually,to effect the sale of the bonds.This
includes authority to seek not only competitive bids for the sale of the bonds authorized but also a negotiated sale conducted as either a public or
private offering negotiated through a purchase agreement with Underwriters.Staff is recommending that these bonds be sold with the City
Manager or the Chief Financial Officer having authority to approve the terms of the sale so long as those terms come 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 categories(BBB or
higher);the maximum maturity is March 1,2042;maximum true interest cost of 5.00%;and maximum net effective interest rate,calculated per
chapter 1204 of the Government Code,is 15.0%. Rating agency calls with Moody's,Fitch,and Kroll will be conducted prior to the sale of the
bonds with the bonds expected to be offered for sale approximately two weeks after ratings are received. Subsequent to 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 ordinance is tied specifically to the refunding portion of this debt issuance and reflects the maximum appropriation
amount for bond proceeds for the refunded debt.The structure of the attached appropriation accommodates variables associated with sale of
debt under delegated authority such as the uncertain final interest rate to be achieved and the possibility of a premium or discount being
associated with the sale of the bonds.To the extent numbers at closing are less than those reflected in the ordinance,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.
The action in this M&C will amend the Fiscal Year 2022 Adopted Budget as approved in connection with Ordinance 25073-09-2021, Section 3.
Debt Service Funds,as listed on page 11 as follows:
Fund/Department FY2022
Adopted Budget Revised FY2022
Budget Category
Budget Adjustment Budget
General Debt Service Fund
Revenues
Property Tax $121,072,221.00 $121,072,221.00
Use of Money and Property $3,074,790.00 $3,074,790.00
Transfer from CCPD $2,713,347.00 $3,713,347.00
Transfer from TIRZ#14 $1,329,084.00 $1,329,084.00
Proceeds from series 2022 refunding
$169,000,000.00
bonds
Total Revenues $128,189,442.00$169,000,000.00$297,189,442.00
Expenditures
Financial Management Services(Debt $128,189,442.00$169,000,000.00$297,189,442.00
Obligation)
Total Expenditures $128,189,442.00$169,000,000.00$297,189,442.00
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 ordinances,the sale of the 2022
General Purpose Refunding and Improvement Bonds will occur as required under the parameters set forth therein,that funds will be available in the
General Debt Service Funds as appropriated,and will be available to repay the debt when due and payable.
Submitted for City Manager's Office-W. Reginald Zeno 8517
Originating Business Unit Head: Reginald Zeno 8517
Additional Information Contact: Anthony Rousseau 8338
Expedited