HomeMy WebLinkAboutIR 8370 INFORMAL REPORT TO CITY COUNCIL MEMBERS NO. 8370
December 11, 2001
Or , ��t � To the Mayor and Members of the City Council
Page i of 3
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SUBJECT: EQUIPMENT NOTE PROGRAM
In January 1999, City staff briefed the City Council about an apparatus replacement plan for
the Fire Department and a financing strategy. In previous fiscal years, funds had been
available in the Capital Projects Reserve Fund to permit the purchase of replacement fire
apparatus to improve the condition of the fleet. Annually from FY1994 to FY1998, almost
$2,000,000 was available for use. Those funds are no longer available.
Section 3 of Chapter 1431, Texas Government Code, authorizes municipalities and counties
to issue"anticipation notes" for various purposes including "the purchase of materials,
supplies, equipment, machinery, buildings, lands, and rights-of-way for an. issuer's authorized
needs." City staff, the City's financial advisors, and the,City's bond counsel reviewed the
Statutes and determined that the City can issue bonds with maturities not to exceed seven
years to fund the purchase of various types of equipment.
In order to maintain an acceptable replacement schedule and the condition of the Fire
Department's fleet, staff recommended that the City issue short-term debt to provide financing.
On February 9, 1999, the City Council adopted Ordinance No. 13701 establishing the
Equipment Note Program, and delegating to the City Manager, any Assistant City Manager
and the Finance Director the authority from time-to-time to sell notes secured by ad valorem
taxes in a total amount not to exceed $20 million.
Originally, it was projected that notes would be issued to finance Fire apparatus according to
the following schedule:
Year Amount
1999 $3,040,000
2000 1,410,000
2001 1,946,000
2002 1,930,000 .-
2003 1,511,000 r"
Total $9,837,000 �
The schedule further assumed annual issuance needs of $1,500,000 in the year 2004 and
after.
One of the advantages of the Equipment Note Program is that the debt does not have to be
incurred until the cash is needed to pay the invoices on the delivered equipment. As a result,
the first notes were not issued until May 2000, raising $1,105,000 to pay for a brush truck
chassis and a ladder tender truck for the Fire Department as well as bulky waste trucks and
refuse trucks for the Solid Waste Division. In March 2001, the second note issuance provided
ISSUED BY'rHE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8370
December 11, 2001
d6a T90t a To the Mayor and Members of the City Council
Page 2 of 3
187%
SUBJECT: EQUIPMENT NOTE PROGRAM
$3,010,000 to pay for 6 pumper trucks, a quint re-build and an aerial.truck rebuild for the Fire
Department.
The table below compares the projected note sales for Fire Department equipment with the
actual amount of notes issued in the past three years for fire apparatus. With the amounts
originally authorized for fire equipment but unissued in the past three years as well as the
amount projected for FY2002, approximately $4.9 million in authorized but unissued notes will
be available in 2002.
Fire Fire Solid Waste Issuance Equipment Fire
Year Scheduled Issued Issued Costs Notes Issued Unissued
1999 $3,040,000 -0- -0- -0- -0- $3,040,000
2000 1,410,000 383,028 647,729 74,,243 1,105,000 4,066,972
011 rZ ", 2001 1,946,000 2,999,532 -0- 10,468 3,010,000 3,002,972
2002 1,930,000 TBD -0- TBD TBD 4,932,972
2003 1,511,000 TBD -0- TBD TBD TBD
TOTAL $9,837,000 $3,382,560 $647,729 $84,711 $4,115,000 TBD
It is expected that a third note issuance in the spring of 2002 will raise $3,220,000 to pay for 4
pumper trucks, 2 brush trucks, an aerial truck and 2 quint refurbishments already ordered by
the Fire Department. Approximately $3.2 million in authorized but unissued notes will then
remain for a fourth note sale in the spring of 2003 to finance the purchase of replacement
pumpers, quints and other fire apparatus.
Under the terms of the current Equipment Note Ordinance (No. 13701), any notes issued must
mature before the seventh anniversary of the date the Attorney General of the State of Texas
approved the initial note issuance. Since the City has issued notes in 2000 and 2001, the City
may only issue notes in 2002 with a five-year maximum maturity. However, the Ordinance also
provides that the City may at anytime adopt an ordinance extending the maximum maturity
date, subject to approval by the Attorney General. Finance staff, in conjunction with the City's
financial advisors, recommends that the maximum maturity be extended to seven years to
manage the City's debt service more effectively.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT' TO CITY COUNCIL MEMBERS No. 8370
December 11, 2001
'01 To the Mayor and Members of the City Council
r
Page 3 of 3
SUBJECT: EQUIPMENT NOTE PROGRAM
An M&C recommending adoption of an ordinance amending Ordinance No. 13701 to re-
establish the seven-year maximum maturity of future note issuances is on your agenda. If you
have any questions or want additional information please call me or Jim Keyes, Director of
Finance.
Lk cj"(2 -
ary W. Jackson
City Manager
ISSUED BY THE CITY MANAGER FORT'WORTH, TEXAS