|
|
City Council |
|||
|
Agenda Request |
||||
|
Agenda Of: |
may 20, 2008 |
Agenda Request
No: |
VI-B |
|
|
Initiated By: |
razeeda boochoon senior budget
analyst |
Responsible
Department: |
fiscal services |
|
|
Presented By: |
Julie Peak, Sr.
Vice President First Southwest
Company |
Department
Head: |
linda symank director of
fiscal services |
|
|
|
|
Additional
Department. Head (s): |
|
|
|
Subject /
Proceeding: |
consideration and
approval of Fort Bend County MUD 138 issuance of $7,425,000 unlimited tax
bonds, series 2008 |
|||
|
Exhibits: |
Staff memorandum debt schedule |
|||
|
Clearances |
Approval |
|||
|
Legal: |
n/a |
Executive
Director: |
n/a |
|
|
Purchasing: |
n/a |
Asst. City
Manager: |
Karen Daly |
|
|
Budget: |
n/a |
City Manager: |
Allen Bogard |
|
|
Budget |
||||
|
Expenditure
Required: $ |
n/A |
|||
|
Current
Budget: $ |
n/a |
|||
|
Additional
Funding: $ |
n/a |
|||
|
Recommended
Action |
||||
|
Consideration and approval
of the issuance of $7,425,000 Unlimited Tax Bonds, Series 2008 for Fort Bend
County Municipal Utility District No. 138. |
||||
|
Executive
Summary |
||||
|
Fort
Bend County Municipal Utility District No.138 is wholly located within the
corporate limits of the City. The district is proposing to issue the second
installment of a total $88,290,000 bond authorization approved by the voters
of the district. This issuance is
planned for $7,425,000. The District’s proposed bond issuance complies with
applicable articles of Chapter 5 of the City’s Code of Ordinances. The
district is one of the four municipal utility districts established within
the 2,018 acre Telfair development.
The district consists of 696 acres of which 251 acres have been
completed. As of April 1, 2008 there
were 234 homes completed, 104 homes under construction or continued to be
owned by a builder and 391 lots available for construction. Home prices range from $275,000 to
$1,000,000. The
issuance of debt is to be used for $5.552 million in costs associated with
the construction of water, wastewater, and drainage projects, including
$800,000 in connection fees and engineering costs. The issue will also fund $1.872 million in
non-construction costs, including 12 months of capitalized interest, issuance
cost, and redemption of a bond anticipation note. |
||||
|
Exhibits |
||||
MEMORANDUM
TO: Allen Bogard, City Manager
FROM: Jennifer Brown, Assistant Fiscal Services Director
DATE: May 13, 2008
SUBJECT: Fort Bend County Municipal Utility
District No. 138
$7,425,000
Unlimited Tax 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 $7,425,000 of Unlimited Tax 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 and the creation agreement 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. 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.
3. The redemption premium shall not exceed two and one-half
percent of par value each year thereafter to par value.
4. Bonds other than refunding bonds and bonds sold to a federal or state agency shall be competitively bid.
5. 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.
6.
Bids will be received not more than forty-five days
after notice of sale of the bonds is given.
7.
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.)
8.
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)
9. 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.
10. Prior to the sale of any
series of District bonds, the district shall secure a letter from the Mayor to
the effect that the district is in compliance with Chapter 5. The Mayor shall address a letter 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.
Presented
below is information regarding the District and the proposed bonds as provided in
the Notice of Sale and Preliminary Official Statement.
|
District
Creation |
April 1,
2005 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). |
|
||
|
Acreage |
696 acres |
|
||
|
Developers
of the District |
NNP-Telfair
LP (“NNP” or the “Developer”), a Delaware limited partnership, is the developer
of the District. The Developer was
created for the sole purpose of developing Telfair. Its only substantial asset consists of land
in Telfair. The general partner of the
Developer is Newland National Partners, LP., a California limited partnership
and the general partner of Newland National Partners, L.P. is American
Newland LLC. American Newland LLC is a planned community developer in the
United States. |
|
||
|
Telfair |
The District
is part of the 2,018 acre master planned community of Telfair and three other
municipal utility districts. In
addition, Fort Bend Levee Improvement District No. 17 was formed to cover
2,317 acres of land. Approximately
1,524 single-family residential lots have been constructed or under
construction in Telfair, including 657 in the District. Recreational amenities within Telfair
include a 2,200 square foot visitors center and central sales office, a lake
system, a greenbelt system, over three miles landscaped trails, six
neighborhood parks each with open space and playground and a recreation
center with a pool, sand volleyball court and playground. |
|
||
|
Status of
District Development |
The District
is being developed as a master-planned community known as Telfair. Home construction in the District began in
2006. As of April 1, 2008, 657
single-family residential lots on approximately 251 acres has been completed,
234 homes were constructed, 104 homes were under construction or continue to
be owned by a builder and 391 vacant developed lots were available for home
construction. Prices of
the homes range from $275,000 to $1,000,000. Approximately
273 additional developable acres currently within the District have not been
provided with water distribution, wastewater collection and storm drainage
facilities and approximately 172 acres are not developable (rights-of-way,
detention, open spaces, easements and utility sites). |
|
||
Water and Wastewater Utilities
|
All of the land in the
District is located within the corporate limits of Sugar Land. The City and the District have entered into
a utility agreement, dated August 8, 2005. Under the utility agreement the
District will acquire, construct, and extend water, sanitary sewer and
drainage facilities to serve the land in the District and when completed in
accordance with approved plans and specifications, the District is required
to convey title to the System in the City.
The City then
operates and maintains the System, and is responsible for establishing water
and sewer rates and billing and collecting for such services. The Utility Agreement provides that the District
retain a security interest in the System to secure the City’s performance
under the Agreement until the District’s bonds have been fully paid. The District will then execute a release of
such security interest and the City will own the System. The Utility Agreement further requires the
District to pay the City a capital recovery fee to purchase water supply and
wastewater treatment capacity in the City’s existing system. The City Connection Charge is set by the
City and may be amended without the District’s consent at anytime. |
|
||
Total Bonds Authorized
|
$86,450,000 for Facilities $56,200,000 in Refunding Bonds $37,675,000 for Road Purposes |
|
||
Bonds Outstanding
|
$13,185,000
after Series 2008 |
|
||
Remaining
Authorization
|
$73,265,000
for Facilities $56,200,000
for Refunding Bonds $37,675,000
for Road Purposes |
|
||
Source of Payment
|
The
principal and interest on the bonds are payable from the proceeds of a
continuing, direct, annual ad valorem tax levied, without legal limitation as
to rate or amount, levied against taxable property located in the District. |
|
||
|
Bond Rating
and Insurance |
The
District has not applied for an underlying rating nor is it expected that the
District would have received an investment grade rating has such an
application been made. The purchase of
the municipal bond insurance, if available, will be at the option and expense
of the Underwriter. |
|
||
|
2007 Tax
Rate (Per $100
Valuation) |
$ .53 Debt
Service $ .10 O
& M $ .63 Total |
|
||
|
Unlimited
Tax Bonds, Series 2008 |
Interest
payments begin in 2008 at $177,890.63 and principal payments begin in 2009
for $150,000 increasing to $545,000 through maturity in 2032. Term of Series is 25 years. |
|
||
|
Maximum
Annual P & I (2032) |
$1,010,013
for all outstanding Bonds |
|
||
|
Average
Annual P & I (2008-2032) |
$977,794 for all
outstanding Bonds |
|
||
Use of Proceeds from Bonds
|
Proceeds of
the Bonds will be used to fund construction costs of $5.552 million
(including $800,000 in utility connection fees) and non-construction costs of
$1.872 million including 12 months capitalized interest, redemption of a 2007
Bond Anticipation Note, and issuance costs. |
|
||
|
2008 Estimated Valuation |
$
137,637,960 at 3/1/2008 |
||
|
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
$0.78/$100 of the 2008 Estimated Valuation and the required tax rate for the
Average Debt Service payment on the bonds is $0.75/$100 of the 2008 Estimated
Valuation assuming a 95% collection rate and no City rebate. |
||
DISTRICT DEBT
Debt Service Requirement Schedule
The following schedule sets
forth the debt service requirements on the outstanding Bonds and the estimated
debt service on the Bonds at an estimated interest rate of 5.75%. This schedule
does not reflect the fact that an amount equal to twenty-four (24) months of
interest was capitalized from Outstanding Bond proceeds in July 2007 and twelve
(12) months of interest will be capitalized from Bond proceeds.
|
|
|
Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Bonds |
|
|
|
|
|
|
|
|
|
|
|
|
Debt
Service |
|
Plus: Debt Service on the Bonds |
|
Debt Service |
|||||
|
Year |
|
Requirements |
|
Principal |
|
Interest |
|
Total |
|
Requirements |
|
|
2008 |
|
$251,950.00 |
|
|
|
$177,890.63 | |||||