City Council

Agenda Request

Agenda Of:

11-03-09

Agenda Request No:

vii-b

Initiated By:

Jennifer Brown

Budget & Research Director

Responsible Department:

Budget & Research

Presented By:

Jennifer Brown

Budget & Research Director

Cliff Kavanaugh

First Southwest Company

Department Head:

Jennifer Brown

Budget & Research Director

Additional Department. Head (s):

n/a

Subject / Proceeding:

2009 Revenue Bonds

Adopt ordinance No. 1762 authorizing the issuance of City of Sugar Land, Texas, Waterworks and Sewer System Revenue Bonds, Series 2009

Exhibits:

Preliminary Official Statement

Ordinance No. 1762

Clearances

Approval

Legal:

n/a

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 Ordinance No. 1762, authorizing the issuance of City of Sugar Land, Texas, Waterworks and Sewer System Revenue Bonds, Series 2009.

Executive Summary

The FY2010 budget and CIP anticipates the issuance of $37.5 million in debt for utility and surface water related projects. Based on project timing, a November 3^rd revenue bond issuance is planned that will provide funding for $27.4 million in projects. Based on project funding needs this issue will support projects that are either ready to begin or are already underway and were approved under an intent to reimburse from bond proceeds resolution in FY09. These projects were budgeted in fiscal years 2008-2010. This issue will fund additional debt service reserves and issuance costs for the bonds.

The projects included in this issue are as follows:

Surface Water Conversion Transmission Line	3,200,000
Surface Water Treatment Plant	7,850,000
Elevated Storage Tank	5,610,000
Sugar Creek WP Distr. Main Upgrade	288,000
Water Plant Upgrades	1,860,000
Woodchester WP Ground Storage Expansion	19,366
Distribution System Water Main Rehabilitation	1,750,000
Groundwater Well Replacement	400,000
Water Plant No. 3 - Water Line & Appurtenances	660,000
Well Rehabilitation	250,000
Austin Parkway Water Plant Improvement	400,000
Distribution System Water Main Rehabilitation	235,000
Lift Station Rehabilitation - Ragus Lakes	450,000
Collection System Rehabilitation Program	415,000
West WWTP Levee System	528,000
Treatment Plants Emergency Power	2,150,000
Lift Station Rehabilitation - SC Market Place, Lombardy and 7th Street	680,000
South WWTP Aeration System Rehabilitation	660,000
Total Projects	27,405,366

There is an additional $8.1 million in projects that will be funded through a calendar year 2010 bond sale, while an additional $2 million for design of the West Wastewater Treatment Plant expansion will be funded through a loan from the Texas Water Development Board.

First Southwest, the City’s Financial Advisors, met with the Council Finance/Audit Committee on October 8, 2009 and recommended at that time that the City utilize a negotiated sale for this transaction to allow more flexibility in the structure of the bond sale and take advantage of low market rates to result in a lower cost of borrowing. As such, First Southwest has recommended the City use Morgan Keegan, Coastal Securities and Merrill Lynch as underwriters for this transaction.

The City requested Standard and Poor’s and Moody’s Investors Service to review and assign ratings to this debt issuance. Conference calls were held on October 15^th with the rating agencies, and Standard & Poor’s maintained their rating of “AA” for the revenue bonds, while Moody’s ratings affirmed their “Aa3” rating for the City.

First Southwest will present the results of the bond sale for Council approval at the meeting. Delivery of funds is anticipated around December 1, 2009.

Exhibits