HomeMy WebLinkAboutOrdinance 26097-04-2023ORDINANCE NO. 26097-04-2023
AN ORDINANCE INCREASING ESTIMATED RECEIPTS AND
APPROPRIATIONS IN THE WATER AND SEW�R REVENU� BONDS S�RI�S
2023 FUND, IN THE AMOUNT OF $190,000,000.00, SUBJ�CT TO THE SAL� OF
BONDS AND RECEIPT OF PROC�EDS, FOR THE PURPOSE OF FUNDING
CAPITAL IMPROV�MENTS AND PAYING THE COSTS OF ISSUANCE, WITH
SUCH AMOUNT SUBJECT TO R�DUCTION TO CONFORM TO FINAL
FIGUR�S R�FLECTED IN BOND CLOSING DOCUMENTS AND WITH ANY
EXC�SS COST OF ISSUANCE FUNDS REMAINING AFTER CLOSING BEING
TRANSFEI2RED TO THE WATER AND SEWERE DEBT SERVICE FUND;
PROVIDING FOR A SEVERABILITY CLAUSE; MAKING THIS ORDINANCE
CUMULATIV� OF PRIOR ORDINANCES; REPEALING ALL ORDINANCES IN
CONFLICT HEREWITH; AND PROVIDING AN EFFECTIVE DAT�.
BE IT ORDAIN�D BY THE CITY COUNCIL OF THE CITY OF FORT WORTH,
TEXAS:
SECTION 1.
That in addition to those ainounts allocated to the various City departments for Fiscal Year 2022-2023 in the
Budget of the City Manager•, thei•e shall also be increased estimated receipts and appropriations in the Water
and Sewer Revenue Bonds Series 2023 Fund in the amount of $190,000,000.00, 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 confoi•m to fina] figures in bond closing documents and with any
excess cost of issuance funds remaining after closing being transferi•ed to the Water and Sewer Debt Service
Fund.
SECTION 2.
That should any portion, section or pa��t of a section of this ordinance be declared invalid, inoperative oi• void
foi• any reason by a court of competent jurisdiction, such decision, opinion or j udgment 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 25773-09-2022 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 i•epealed.
SECTION 4.
This ordinance shall take effect upon adoption.
APPROVED AS TO FORM AND LEGALITY: CITY SECRETARY
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Assistant City Attorney
ADOPTED AND EFFECTNE: April 11, 2023
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City of Fort Worth,
Mayor and
Texas
Council Communication
DATE: 04/11/23 M&C FILE NUMBER: M&C 23-0278
LOG NAME: 13WATER AND SEWER REVENUE BONDS SERIES 2023
SUBJECT
(ALL) Adopt Attached Fortieth Supplemental Ordinance Authorizing Ciry of Fort Worth, Texas Water and Sewer System Revenue Bonds, Series
2023, in an Aggregate Principal Amount Not to Exceed $190,000,000.00, Establishing Parameters with Respect to the Sale of the Bonds,
Delegating to Designated City Officials Authority to Effect the Sale of Bonds by Competitive Bid or Negotiated Sale, Authorizing Related
Agreements, and Enacting Other Related Provisions; Adopt Attached Amended and Restated Thirty-Second Supplemental Ordinance to Extend
Period of Delegated Authority for Water and Sewer Refunding Bonds in Support of the Commercial Paper Program; and Adopt Appropriation
Ordinance
RECOMMENDATION:
It is recommended that the City Council:
2.
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Adopt the attached fortieth supplemental ordinance (i) authorizing the issuance of City of Fort Worth, Texas Water and Sewer System
Revenue Bonds, Series 2023, in an aggregate principal amount not to exceed $190,000,000.00, for the purpose of funding system
improvements and paying costs of issuance (ii) delegating to designated City officials authoriry to effect the sale - 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) providing for the establishment of rates and collection of revenues sufficient to pay the principal and interest on said bonds;
and (iv) enacting other provisions related thereto;
Adopt the attached appropriation ordinance increasing estimated receipts and appropriations in the Water and Sewer Revenue Bonds
Series 2023 Fund by $190,000,000.00, 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;
and
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 $225,000,000.00 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) authorizing 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; and (v) extending the delegated
authority to effect the sale of refunding bonds through April 12, 2024.
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 (Fortieth Supplement),
extending standby refunding authority to facilitate the System's Commercial Paper (CP) program (Amended and Restated Thirty-Second
Supplement), adopting an associated appropriation ordinance, and amending the Fiscal Year 2023 budget.
Fortieth Supplement
Recommendations 1 and 2 relate to the Fortieth supplemental ordinance, which authorizes issuance and sale of up to $190,000,000.00 in Water
and Sewer system revenue improvement bonds, in one or more series, for the purpose of (i) extending and improving the system, and (ii) paying
the costs of issuance of the bonds, and to the appropriation of the bond proceeds. The proposed debt transaction consists of $180,000,000.00 in
new money to fund capital projects in alignment with the Water Department's Capital Improvement Program.
In 1991, the City adopted a master ordinance establishing a Water and Sewer System Revenue Financing Program for the Water Department.
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 fortieth supplemental ordinance since the master ordinance was adopted.
Due to current market conditions, public issuers may struggle 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 Ciry
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 maturiry is February 15, 2053; the maximum true interest cost is 6.00%; and the maximum net effective interest rate,
calculated per chapter 1204 of the Government Code, is 15.00%.
Rating agency calis with Moody's and S&P will be conducted prior to the sale of the bonds. Ratings are anticipated to be received the week of
May 1, 2023. Bids for the sale of the bonds are scheduled to be submitted on May 17, 2023. Subsequent to accepting the best bid 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 of June
15, 2023.
The attached appropriation ordinance reflects the maximum appropriation amount for bond proceeds for each of the identified purposes. The
ordinance structure 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. Similariy, to the extent there are any remaining proceeds after paying cost of issuance
expense, those funds are to be moved to the Water Prior Lien Debt Service Fund.
Amended and Restated Thirty-Second Supplement
Recommendation 3 of 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 $225,000,000.00 in Water and Sewer revenue refunding bonds if
needed to facilitate the system's CP program. As approved by the Ciry Council in December 2017, the thirry-second supplemental ordinance was
initially adopted by M&C C-28496 and authorized up to $150,000,000.00 in short-term commercial paper for the Water and Sewer System to be
outstanding at any time. In subsequent years, the thirty-second supplemental ordinance has been amended and restated (M&Cs G-19266, G-
19531, 20-0224, 21-0262, and 22-0260). Recently, on February 14, 2023, City Council approved increasing the CP program from
$150,000,000.00 to $225,000,000.00 (M&C 23-0105).
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 efficientiy design and commence capital projects that 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 maturiry that is later than
the 270th day after the date on which the paper is initially issued. The thirry-second supplemental is an integral patt 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.
Adoption of the attached amended and restated version of the thirty-second supplemental ordinance extends the delegated authoriry of the pricing
officers to effect sale of all or any portion of up to $225,000,000.00 in revenue refunding bonds through April 12, 2024. 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 authority 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.
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
15.00%. In accordance with the practice of the Texas Attorney General, the prior versions of the thirty-second supplemental ordinance provided
delegated authoriry that would expire a year after the ordinance (original or restated) was adopted.
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 ordinance,
the sale of the Series 2023 Water and Sewer System Revenue Bonds will occur as required under the parameters set forth therein and that
funds will be available in the W&S Rev Bonds Series 2023 Fund to record the appropriate and necessary transactions. Pursuant to the
recommended actions, appropriation authority up to $225,000,000.00 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 b� Reginald Zeno 8517
Originating Business Unit Head: Reginald Zeno 8517
Additional Information Contact: Anthony Rousseau 8338
Expedited