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City Council |
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Agenda Request |
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Agenda Of: |
April 1, 2008 |
Agenda Request
No: |
V A |
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Initiated By: |
razeeda boochoon senior budget
analyst |
Responsible
Department: |
fiscal services |
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Presented By: |
Jeanne H. McDonald attorney at law |
Department
Head: |
Linda Symank Director of
Fiscal Services |
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Additional
Department. Head (s): |
Christopher
Steubing City Engineer |
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Subject /
Proceeding: |
Consideration and
approval of Fort Bend County MUD No. 21 issuance of $4,000,000 unlimited tax
and contract revenue bonds, series 2008 |
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Exhibits: |
Staff memorandum debt schedule preliminary
official statement (Hard Copy in Council Office) |
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Clearances |
Approval |
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Legal: |
n/a |
Executive
Director: |
Jim Callaway Community
Development |
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Purchasing: |
n/a |
Asst. City
Manager: |
Karen Daly |
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Budget: |
n/a |
City Manager: |
Allen Bogard |
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Budget |
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Expenditure
Required: $ |
n/A |
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Amount
Budgeted/Reallocation: $ |
n/a |
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Additional
Appropriation: $ |
n/a |
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Recommended
Action |
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Consideration and approval
of the issuance of $4,000,000 Unlimited Tax and Contract Revenue Bonds, Series
2008 for Fort Bend County Municipal Utility District No. 21. |
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Executive
Summary |
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Fort
Bend County Municipal Utility District No. 21 is wholly located within the
corporate limits of the City, encompassing the Sugar Land Business Park. The
district is proposing to issue the eighth installment of a total $64,055,000
bond authorization approved by the voters of the district. Upon issuance of
these bonds, the District will have $4,730,000 of bonds for water, sewer and
drainage authorized but un-issued. The
District states in the preliminary official statement that this bond issue is
intended to be the final issuance as there is no more development planned for
the District. The
District encompasses approximately 1,037 acres of land (865 acres of which
are developable) within its boundaries, all of which are within Fort Bend
County, Texas and the City of Sugar Land.
Development of the District currently consists of industrial and
commercial uses. After issuance of the
Bonds, the District will construct water distribution, wastewater collection
and storm drainage facilities for the remaining undeveloped acreage using the
proceeds from this bond issue. The
issuance of debt is to be used for construction costs (total developer contribution
items) for $2,642,960, land costs for Hwy 90A Detention Pond $1,100,000 and
Non-Construction Costs for $532,040 for a total of $4,275,000. The district will apply a surplus fund
available of $275,000 for a net amount of $4,000,000. Non-Construction Costs includes 24 months
of capitalized interest and bond issuance costs. The
proposed term of the debt issuance is 19 years with principal and interest
payments. The proposed debt service schedule buys down principal beginning in
2009 at $10,000 and increases to $705,000 in 2027. The proceeds of the bonds will fund
twenty-four months of capitalized interest, the maximum allowed by the TCEQ
and the City under Chapter 5.
Preliminary debt service schedules show an average debt service
requirement of $374,717 with a maximum debt service requirement of $724,388
in 2027. The district has $17,007,693
in outstanding principal and interest paying off in 2021. City
staff has made recommendations to the district’s financial advisor and bond
counsel regarding the proposed debt structure as provided by Chapter 5. The district’s financial advisor is working
to incorporate the City’s recommendations into the proposed bond issue and
updated information will be shared with City Council once it becomes
available. |
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Exhibits |
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MEMORANDUM
TO: Allen Bogard, City Manager
FROM: Jennifer Brown, Assistant Fiscal Services Director
DATE: March 24, 2008
SUBJECT: Fort Bend County Municipal Utility
District No. 21
$4,000,000
Unlimited Tax and Contract Revenue Bonds, Series 2008
___________________________________________________________________________________________________________________________________________
Fort Bend County Municipal
Utility District, a wholly incorporated District within the City limits is
presenting to the Mayor and City Council for consideration and approval of the proposed
sale of $4,000,000 of Unlimited Tax and Contract Revenue Bonds, Series
2008. Prior to the sale of these bonds,
the District must obtain a letter from the Mayor to the effect that the
District is in compliance with appropriate clauses of Chapter 5 of the Code of
Ordinances. In addition, the Mayor must
also provide a letter to the Attorney General of the State of Texas approving
the form of the resolution or order of the board of directors authorizing the
issuance of any bonds of the District absent the interest rates and sales price
of the proposed bonds.
The rules, regulations and
standards as set forth in Chapter 5 of the Code are summarized as follows:
1. Bonds may be issued by the District only for the
purpose of purchasing, constructing, improving, and maintaining water, sanitary
sewer and drainage systems within the boundaries of the District.
2.
Before the commencement of any construction within the
district, the district, its directors, officers or the developers and
landowners must submit to the city or its designated representative all plans
and specifications for the construction of water, sanitary sewer and drainage
facilities to serve such district and obtain the approval of such plans and
specifications by the city.
3. District bonds shall expressly reserve the right of
redemption of any bonds on any interest payment date subsequent to the tenth
anniversary of the date of issuance.
4. The
redemption premium shall not exceed two and one-half percent of par value each
year thereafter to par value.
5. Bonds other
than refunding bonds and bonds sold to a federal or state agency shall be
competitively bid.
6. No bonds
shall be sold for less than ninety-five percent of par, provided that the net
effective interest rate on the bonds sold, taking into consideration any
discount or premium as well as the rate borne by the bonds, shall not exceed
two percent above the highest average interest rate reported by the Daily Bond
Buyer during the thirty day period preceding the date of the sale of the bonds.
7. Bids will be
received not more than forty-five days after notice of sale of the bonds is
given.
8. The order or resolution of the District authorizing
the issuance of all refunding bonds of the District shall be approved by the
Mayor. (N/A in this case.)
9. The
District’s resolution authorizing the issuance will contain a provision that
the pledge of the revenues from the operation of the District’s water and sewer
and/or drainage system to the payment of the District’s bonds will terminate
when and if the City or some other City annexes the District, takes over the
assets of the District and assumes the obligations of the District. This
issuance, under consideration, is bonds payable from annual ad valorem tax. (This
part is Not Applicable as the District is wholly and fully incorporated within
City limits)
10. The District
shall not be permitted to escrow any funds in excess of two years' interest on
the bonds which the district issued and shall levy a tax simultaneously with
the first installment of such bonds and will continue a tax levy until such
bonds are paid in full, unless the revenues of the system are adequate to
discharge such bonds.
11. Prior
to the sale of any series of district bonds, the district must secure a letter
of the mayor to the effect that the district is in compliance with this
article, and a letter of the mayor addressed to the attorney general of Texas
approving the form of the resolution or order of the board of directors
authorizing the issuance of any bonds of the district absent the interest rates
on and sales price of the bonds.
12. The
city will make recommendations to the board of the district and its financial
advisor as to the amount of bonds that should be authorized, the installment
sale of such authorization, the maturity schedule of each installment, the
optional provisions to be contained in such bonds, and the sale and delivery of
the district bonds.
Presented
below is information regarding the District and the proposed bonds as provided
in the Notice of Sale and Preliminary Official Statement.
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District
Creation |
March 10,
1977 by the Texas Water Commission which is now the Texas Commission on
Environmental Quality (TCEQ). The
District is wholly incorporated within the corporate limits of the City of
Sugar Land (City). |
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Acreage |
1,037 acres |
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Developers
of the District |
Development of the District began in
1977. The land within the district is being developed for industrial and
commercial use and is known as the Sugar Land Business Park. The plan for development
of the approximately 1,037 acres within the District sets out the land use as
follows: 865 developable acres for commercial and industrial of which 704.9
acres were developed from prior bond issues and 160.1 acres will be developed
from the current bond issue and 172 undevelopable acres for streets, drainage
easements and pond. |
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Water and Wastewater Utilities
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On July 5, 1977, the District
entered into a 40-year contract with the City of Sugar Land (the “City”) for construction
and extension of water distribution lines, sanitary sewer collection systems
and drainage facilities to serve the District. The agreement was supplemented or amended
July 18, 1978, May 5, 1992, September 19, 2000 and January 16, 2001. As the system is acquired or constructed,
the District shall transfer the system to the City but will reserve a
security interest in the system and provide service to all users in the
District. The City is then obligated to
operate and maintain the completed project. The City charges customers in the
District the same rate as similar users in the City. |
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Total Bonds Authorized
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$64,055,000 Voted Authorization |
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Bonds Outstanding
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$17,135,000
after Series 2008 |
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Remaining Authorization
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$ 4,730,000 |
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Source of Payment
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The
principal and interest on the bonds are payable from the proceeds of an
annual ad valorem tax levied upon all taxable property within the District, which
under Texas law is not limited as to rate or amount and by pledge of certain
revenues from the City of Sugar Land, Texas, pursuant to the terms of a
Utility Agreement between the District and the City. The Bonds are obligations of the District,
and are not obligations of the State of Texas, Fort Bend County, and the City
of Sugar Land, Texas, or any other entity in the District. |
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Bond Rating
and Insurance |
TCEQ
requires MUD bonds to be sold with credit enhancement (insurance). The District
has made an application to MBIA Insurance Corporation, Ambac Assurance
Corporation, Financial Security Assurance Inc., Financial Guaranty Insurance
Company, Assured Guaranty Corp. and CIFG Services, Inc., to issue a
commitment for municipal bond guaranty insurance on the bonds. If qualified, the payment of all costs
associated with the insurance, including the premium charged by the insurer
and fees charged by rating companies other than S & P, will be the
obligation of the Initial Purchaser. |
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2007 Tax
Rate (Per $100
Valuation) |
$ 0.32 Debt
Service $ 0.07 O
& M $ 0.39
Total |
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Unlimited
Tax and Contract Revenue Bonds, Series 2008 |
Interest
payments begin in 2008 at $73,333 and principal payment begin in 2009 for $10,000
increasing to $705,000 through maturity in 2027. Term of Series is 20 years. |
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Maximum
Annual P & I (2009) |
$1,969,720 |
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Average
Annual P & I (2008-2027) |
$1,241,780 |
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Use of Proceeds from Bonds
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Proceeds from
the sale of the Bonds will be used to: 1)
reimburse the Developer for the District share of engineering and
construction costs of a) water, sewer and drainage improvements to Prologis
Park Sugar Land, a commercial tract, Sugar Land Central Phases 1, 2 and 3,
and b) Highway 90A Detention Pond Phases 1 and 2; 2) purchase
land for the Highway 90A Detention Pond; and 3) pay
certain administrative and issuance cost of the Bonds. |
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2007 Certified Assessed Valuation |
$
450,736,933 at 1/1/2007 |
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Tax Rate Requirement for Maximum and Average Debt Service (95% collection) |
The
required tax rate for the Maximum Debt Service payment on the bonds is
$0.46/$100 of the 2007 Certified Assessed Valuation and the required tax rate
for the Average Debt Service payment on the bonds is $0.29/$100 of the 2007
Certified Assessed Valuation assuming a 95% collection rate. |
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DISTRICT DEBT
Preliminary Debt Service Schedule
The following schedule sets forth
the debt service requirements on the Bonds at an estimated interest rate of
5.50%. This schedule does not reflect the fact that an amount equal to
twenty-four (24) months of interest will be capitalized from Bond proceeds.
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Debt Service on The Series 2008 Bonds |
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Year |
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Principal |
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Interest |
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Total |
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2008 |
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$
73,333 |
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$
73,333 |
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2009 |
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$
10,000 |
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219,725 |
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229,725 |
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2010 |
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10,000 |
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219,175 |
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229,175 |
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2011 |
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10,000 |
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218,625 |
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228,625 |
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2012 |
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20,000 |
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217,800 |
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237,800 |
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2013 |
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20,000 |
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