City Council

Agenda Request

Agenda Of:

05-25-10

Agenda Request No:

II-A

Initiated By:

Jennifer Brown

Responsible Department:

Budget & Research

Presented By:

Jennifer Brown

Budget & Research Director

Department Head:

Jennifer Brown

Budget & Research Director

Additional Department. Head (S):

Regina Morales

Director of Economic Development

Subject / Proceeding:

Sales Tax Refunding Bonds

Consideration and Approval of a Resolution Authorizing the Issuance of Sugar land 4B corporation Sales Tax Refunding Bonds Series 2010

Exhibits:

Preliminary Official Statement

Resolution No. 10-23

Clearances

Approval

Legal:

Joe Morris

Resolution Prepared by Vinson & Elkins

Executive Director:

N/A

Purchasing:

N/A

Asst. City Manager:

Karen Glynn

Budget:

N/A

City Manager:

Allen Bogard

Budget

Expenditure Required: $

N/A

Current Budget: $

N/A

Additional Funding: $

N/A

Recommended Action

Approve Resolution No.10-23 approving a resolution of the Sugar Land 4B Corporation authorizing the issuance of the Sugar Land 4B Corporation Sales Tax Revenue Refunding Bonds, Series 2010.

Executive Summary

The City’s financial advisor, First Southwest Company, monitors the bond market and makes recommendations on refinancing the City’s outstanding bonds as opportunities present themselves for savings. First Southwest has identified two Sugar Land 4B Corporation issues that have potential savings.

Series	Call Date	Principal to Refund
2001 Sales Tax Revenue Bonds	2/15/2011	$ 2,910,000
2002 Sales Tax Revenue Bonds	2/15/2011	5,870,000
Total 4B Principal to Refund		$ 8,780,000

In an effort to maximize the City’s savings in this transaction, staff and First Southwest recommend a process called a “parameter sale” whereby the board approves a resolution authorizing the transaction to refund the bonds within parameters or minimum levels of savings and authorizing representatives to execute the transaction within those parameters. This process provides more opportunities to capture market conditions without having to time the sale to Board and City Council meeting dates. The City has successfully utilized the parameter sale process in the past for refunding transactions.

This sale is an advance refunding and involves escrowing funds until the call date of the bonds, which is February 15, 2011. As such, a negotiated sale is the recommended process for this transaction instead of a competitive sale. This process will allow First Southwest to identify when market conditions are beneficial to the City and begin the negotiation process with the selected underwriter. First Southwest recommends Morgan Keegan and RBC Capital Markets as the underwriters for this refunding transaction. The new bonds will be structured to provide for level annual savings as compared to current total debt service, while not extending the current maturity schedule.

Based on current and past market conditions, a recommended parameter is minimum net present value savings as a percent of refunded principal; in this case staff recommends a savings of 4.75% as a minimum parameter.

The 4B Corporation approved Resolution 2010-05-02 on May 19, 2010 authorizing the sale of refunding bonds under a parameter sale. The resolution designates a pricing officer to serve as the Corporation’s authorized representative; the Board designated the City Manager as the pricing officer. In addition, the Board approved the 4.75% minimum parameter. Under the Corporation bylaws, the City Council must approve any resolution authorizing bonds after the Board has approved it.

Staff recommends City Council approval. The refunding recommendation and process was reviewed with the City Council Finance/Audit Committee. Upon City Council consideration, First Southwest can begin monitoring the market and as conditions become favorable, begin negotiations with the underwriting team to sell the refunding bonds.

Exhibits

RESOLUTION NO. 10-23

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SUGAR LAND, TEXAS, APPROVING A RESOLUTION OF THE SUGAR LAND 4B CORPORATION AUTHORIZING THE ISSUANCE OF THE SUGAR LAND 4B CORPORATION SALES TAX REVENUE REFUNDING BONDS, SERIES 2010

* * * * * * * * * *

WHEREAS, the Sugar Land 4B Corporation (the “Corporation”) is a non‑profit industrial development corporation created, existing and governed by Chapter 505, Texas Local Government Code, as amended (previously the Development Corporation Act of 1979, Section 4B of Article 5190.6, Tex. Rev. Civ. Stat. Ann.), (the “Act”); and

WHEREAS, the Corporation was created by the City of Sugar Land, Texas (the “City”), and authorized to act on behalf of the City in furtherance of the public purposes of the Act; and

WHEREAS, a sales and use tax at the rate of one-quarter of one percent for the benefit of the Corporation (the “Sales Tax”) was authorized by the voters of the City at an election held on January 21, 1995; and

WHEREAS, the Board of Directors of the Corporation proposes to issue Sugar Land 4B Corporation Sales Tax Revenue Refunding Bonds, Series 2010 (the “Bonds”) in an amount not to exceed [$________] pursuant to the terms of a resolution (the “Bond Resolution”) adopted by the Board of Directors of the Corporation on May 19, 2010; and

WHEREAS, the Bond Resolution has been presented to the City Council for review and approval; and

WHEREAS, the Corporation and the City have approved the refunding of a portion of the outstanding obligations of the Corporation, as more specifically described in the Bond Resolution (the “Refunded Bonds”); and

WHEREAS, Chapter 501 of the Texas Local Government Code, as amended, requires the City Council of the City to approve the Bond Resolution prior to delivery of the Bonds by the Corporation;

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SUGAR LAND, TEXAS:

Section 1. The recitals set forth in the preamble to this resolution are adopted as the findings of fact and conclusions of the City Council of the City.

Section 2. The Bond Resolution and the issuance of the Bonds, as provided therein, are hereby approved. The City will comply with the continuing disclosure of information requirements contained in Article XIII of the Bond Resolution.

Section 3. While the Bonds are outstanding, the City will take all steps necessary to continue the levy and collection of the Sales Tax in accordance with the provisions of the Act.

Section 4. This resolution shall be effective immediately.

PASSED AND APPROVED the 25^th day of May, 2010.

/s/ James A. Thompson

_________________________________

Mayor

City of Sugar Land, Texas

ATTEST:

/s/ Glenda Gundermann

___________________________________

City Secretary

City of Sugar Land, Texas

(SEAL)

APPROVED AS TO LEGALITY:

/s/ Barron Wallace

____________________________________

Bond Attorney

VINSON & ELKINS L.L.P.