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City Council |
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Agenda Request |
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Agenda Of: |
10-20-09 |
Agenda Request
No: |
iv-a |
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Initiated By: |
Razeeda Boochoon Senior Budget
Analyst |
Responsible
Department: |
Budget &
Research |
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Presented By: |
Bryan Guinn,
Budget Manager And |
Department
Head: |
Jennifer Brown Budget And
Research Director |
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Richard Muller,
Allen Boone Humphries Robinson Llp |
Additional
Department. Head (s): |
Christopher L. Steubing City Engineer |
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Subject /
Proceeding: |
Consideration and
Approval of First Colony Municipal Utility District No. 10 Issuance of
$4,280,000 Unlimited Tax Bonds, Series 2009 |
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Exhibits: |
Staff Memorandum Debt Schedule |
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Clearances |
Approval |
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Legal: |
n/a |
Executive
Director: |
n/a |
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Purchasing: |
n/a |
Asst. City Manager: |
n/a |
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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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Approve the issuance of
$4,280,000 Unlimited Tax Bonds, Series 2009 for First Colony Municipal
Utility District No. 10. |
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Executive
Summary |
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First
Colony Municipal Utility District #10 is wholly located within the corporate
limits of the City. The district is proposing to issue the third installment
of a total $34,370,000 bond authorization approved by the voters of the
district. The issue is planned for
$4,280,000. The District’s proposed bond issuance complies with applicable
articles of Chapter 5 of the City’s Code of Ordinances. The District encompasses approximately 226
acres of which approximately 163 acres have been developed with water,
sanitary sewer, and drainage facilities.
There are approximately 53 remaining developable acres and
approximately 11 undevelopable acres.
Commercial development within the District consists of approximately
435,000 square feet of office space and approximately 200,000 square feet of
retail space that is either complete or in various stages of construction. As
of September 15, 2009, the District contained approximately 125,000 square
feet of occupied retail space anchored by a 50,000 square foot Whole Foods.
Other retail consists of various shopping, personal services and restaurants.
A subsidiary of St. Luke’s Episcopal Health System, St. Luke’s Sugar Land
Hospital, opened in October 2008 with a full spectrum of inpatient and
outpatient services. Medistar Corporation, the developer of the hospital,
also developed a 150,000 square foot medical office building that directly
connects to the hospital. Residential development within the District consists of approximately 47 acres developed as 284 lots. As of October 5, 2009, there were 92 completed homes, 11 homes under construction, and 181 vacant lots. The
issuance of debt will be used for construction costs of $3,578,444 and
non-construction costs of $701,556. The District is not capitalizing any
interest cost on these bonds. |
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Exhibits |
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MEMORANDUM
TO: Allen Bogard, City
Manager
VIA: Jennifer Brown, Budget and
Research Director 
FROM: Razeeda Boochoon, Sr. Budget
Analyst
DATE: October
6, 2009
SUBJECT: First
Colony Municipal Utility District No. 10
$4,280,000 Unlimited Tax
Bonds, Series 2009
First Colony Municipal
Utility District No. 10, 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 $4,280,000 of Unlimited Tax Series 2009. 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.
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District
Creation |
First
Colony Municipal Utility District No. 10 (the “District”) was created by
order of TCEQ, dated November 2, 2004 and by a confirmation election held
within the District on February 5, 2005, and operates under chapters 49 and
54 of the Texas Water Code and other general laws of the State of Texas
applicable to municipal utility districts. |
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Location |
The District is located in Northeast
Fort Bend County within the City of Sugar Land’s corporate limits. The District is approximately 25 miles
southwest of the central business district of Houston, at the intersection of
State Highway 6 and US59. The District
lies entirely within the boundaries of the Fort Bend Independent School
District. |
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Acreage |
226 acres |
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Developers
of the District |
Lake Pointe
Town Center, Ltd. (the “Partnership” or the “Developer”) is a Texas limited
partnership between three Texas limited partnerships: PCD Lake Pointe, Ltd.,
(0.5% general partner); Planned Community Developers, Ltd., (2.0% limited
partner; and Town Center Lakeside, Ltd., (97.5% limited partner). The Partnership was formed on May 26, 2004,
for the purpose of pursuing the development of the 190 acre, mixed-use
planned community known as Lake Pointe Town Center in Sugar Land, Texas. The development of the District is being
managed by Planned Community Developers, Ltd. (“PCD”). The principals of PCD have over 20 years of
experience in planning, developing, contracting, leasing, marketing and
managing of commercial and residential projects. |
Homebuilders within the
District
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Currently,
Hahnfield-Witmer-Davis Companies, Christopher Sims Customs Homes, Steve Fuqua
Homes and Centamark have purchased lots and are building luxury
patio/courtyard homes in Section 4. Hahnfeld-Witmer-Davis Companies,
Christopher Sims Custom Homes, and Steve Fuqua Homes have purchased lots and
are building luxury villas in Section 5. Section 4, Creekbend, consists of 87
lots and Section 5, The Villas, consists of 18 lots. The homes are priced
from $700,000 up to $2,000,000. Additionally, Hahnfield-Witmer-Davis is
constructing townhomes and urban studios in Sections 2 and 3. Homes in Sections 2 and 3 are priced from
$400,000 to $1,000,000. ZK Homes is
constructing patio homes and townhomes in the section known as The Enclave at
Lake Pointe. Homes in The Enclave are
priced from $400,000 to $800,000. |
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Status of District Development |
The District encompasses approximately 226 acres of
which approximately 163 acres have been developed with water, sanitary sewer,
and drainage facilities. There are
approximately 53 remaining developable acres and approximately 11
undevelopable acres. Commercial
development within the District consists of approximately 435,000 square feet
of office space and approximately 200,000 square feet of retail space that is
either complete or in various stages of construction. As of September 15,
2009, the District contained approximately 125,000 square feet of occupied
retail space anchored by a 50,000 square foot Whole Foods. Other retail consists
of various shopping, personal services and restaurants. A subsidiary of St.
Luke’s Episcopal Health System, St. Luke’s Sugar Land Hospital, opened in
October 2008 with a full spectrum of inpatient and outpatient services.
Medistar Corporation, the developer of the hospital, also developed a 150,000
square foot medical office building that directly connects to the hospital. Residential development within the
District consists of approximately 47 acres developed as 284 lots. As of October 5, 2009, there were 92
completed homes, 11 homes under construction, and 181 vacant lots. |
Water
and Wastewater Utilities
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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 March 2, 2004, which obligates the District to
acquire, construct and extend water, wastewater and storm drainage facilities
(the “System”) to serve land in the District and, when completed in
accordance with plans and specifications approved by the City, to convey
title to such facilities to the City.
The City will then operate and maintain such facilities, and be
responsible for establishing water and sewer rates and collection charges for
water and sewer service from District residents. The City also levies and collects ad
valorem taxes on taxable property within the District just as it does with
any other property located in the City.
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Total Bonds Authorized
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$18,080,000 for Water, Sanitary Sewer and Drainage $7,250,000 for Parks and Recreation $9,040,000 for Refunding |
Bonds
Outstanding
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$5,570,000 Series 2007 $3,810,000 Series 2008 $4,280,000 Series 2009 |
Remaining Authorization
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$4,200,000 for Water, Sanitary Sewer and Drainage $7,250,000 for Parks and Recreation $9,040,000 for Refunding |
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. |
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Municipal
Bond Rating and Insurance |
The
District has made application for a commitment for municipal bond guaranty
insurance on the Bonds. The purchase of
such insurance, if available, and payment of all associated costs, including
the premium charged by the insurer, and fees charged by any rating companies,
will be at the option and expense of the Initial Purchaser. The
District has made application for a municipal bond rating to Standard and
Poor’s Rating Services (“S&P) for an underlying rating on the outstanding
debt of the District but has not received the rating as yet. |
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2009 Tax
Rate (Per $100
Valuation) |
$0.40 Debt
Service $0.35 O & M $0.75 Tax Rate
Limitation: Debt
Service-Unlimited (no legal limit as to rate or amount) Maintenance
- $0.75/$100 Assessed Valuation |
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Unlimited
Tax Bonds, Series 2009 |
Interest payments
begin in 2010 for $214,000 and principal payment begin in 2011 for $90,000
increasing to $380,000 through maturity in 2031. Term of Series is 22 years. |
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Maximum
Annual P & I (2031) |
$1,150,175
(includes Series 2007, Series 2008
& Series 2009) |
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Average
Annual P & I (2011-2031) |
$1,132,980 (includes Series
2007, Series 2008 & Series 2009) |
Use
of Proceeds from Bonds
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2009 Certified Assessed
Valuation
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$
289,406,718 |
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Tax Rate Requirement for Maximum and Average Debt Service (95% collection) |
Based
upon the 2009 Certified Assessed Valuation, the required tax rate for the
Maximum Debt Service on the bonds is $0.42/$100 and the required tax rate for
the Average Debt Service payment on the bonds is also $0.42/$100 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 Bonds at an estimated interest rate
of 6.00%.
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Series 2009 - The Bonds |
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Year-Ended |
Outstanding |
Total Principal |
New Debt |
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31-Dec |
Debt Service |
Principal |
Interest |
& Interest |
Service |
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2010 |
757,873.75 |
214,000.00 |
214,000.00 |
971,873.75 |
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2011 |
762,113.75 |
90,000.00 |
256,800.00 |
346,800.00 |
1,108,913.75 |
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2012 |
760,523.75 |
95,000.00 |
251,400.00 |
346,400.00 |
1,106,923.75 |
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2013 |
763,298.75 |
105,000.00 |
245,700.00 |
350,700.00 |
1,113,998.75 |
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2014 |
765,208.75 |
110,000.00 |
239,400.00 |
349,400.00 |
1,114,608.75 |
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2015 |
766,233.75 |
120,000.00 |
232,800.00 |
352,800.00 |
1,119,033.75 |
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2016 |
771,308.75 |
130,000.00 |
225,600.00 |
355,600.00 |
1,126,908.75 |
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2017 |
769,808.75 |
140,000.00 |
217,800.00 |
357,800.00 |
1,127,608.75 |
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2018 |
771,958.75 |
150,000.00 |
209,400.00 |
359,400.00 |
1,131,358.75 |
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2019 |
767,678.75 |
160,000.00 |
200,400.00 |
360,400.00 |
1,128,078.75 |
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2020 |
767,353.75 |
175,000.00 |
190,800.00 |
365,800.00 |
1,133,153.75 |
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2021 |
770,581.25 |
185,000.00 |
180,300.00 |
365,300.00 |
1,135,881.25 |
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2022 |
767,077.50 |
200,000.00 |
169,200.00 |
369,200.00 |
1,136,277.50 |
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2023 |
767,152.50 |
215,000.00 |
157,200.00 |
372,200.00 |
1,139,352.50 |
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2024 |
765,611.25 |
230,000.00 |
144,300.00 |
374,300.00 |
1,139,911.25 |
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2025 |
767,433.75 |
250,000.00 |
130,500.00 |
380,500.00 |
1,147,933.75 |
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2026 |
762,340.00 |
265,000.00 |
115,500.00 |
380,500.00 |
1,142,840.00 |
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2027 |
760,280.00 |
285,000.00 |
99,600.00 |
384,600.00 |
1,144,880.00 |
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2028 |
756,375.00 |
310,000.00 |
82,500.00 |
392,500.00 |
1,148,875.00 |
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2029 |
755,495.00 |
330,000.00 |
63,900.00 |
393,900.00 |
1,149,395.00 |
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2030 |
747,375.00 |
355,000.00 |
44,100.00 |
399,100.00 |
1,146,475.00 |
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2031 |
747,375.00 |
380,000.00 |
22,800.00 |
402,800.00 |
1,150,175.00 |
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$ 16,790,457.50 |
$ 4,280,000.00 |
$ 3,694,000.00 |
$ 7,974,000.00 |
$ 24,764,457.50 |
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