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City Council |
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Agenda Request |
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Agenda Of: |
11-17-09 |
Agenda Request
No: |
v-a |
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Initiated By: |
Razeeda Boochoon Senior Budget
Analyst |
Responsible
Department: |
Budget &
Research |
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Presented By: |
Jennifer Brown
& Craig Rathmann,
Rathmann & Associates |
Department
Head: |
Jennifer Brown Budget And
Research Director |
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Additional
Department. Head (s): |
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Subject /
Proceeding: |
Consideration and Approval of Fort Bend County Municipal Utility
District No. 106 Issuance of $4,195,000 Unlimited Tax Refunding 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: |
Karen Glynn |
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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 $4,195,000 Unlimited Tax Refunding Bonds,
Series 2009 for Fort Bend County Municipal Utility District No. 106. |
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Executive
Summary |
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Fort
Bend County Municipal Utility District #106 (the district) is located
entirely within the extraterritorial jurisdiction of Sugar Land. The District
is part of the master-planned community known as Greatwood. The district is
proposing to issue the second installment out of a total $16,200,000 bond
authorization for refunding purposes, which was approved by the voters of the
district. The issue is planned for
$4,195,000. The District’s proposed bond issuance complies with applicable
articles of Chapter 5 of the City’s Code of Ordinances and the District’s and
City’s Strategic Partnership Agreement.
The District consists of approximately 2,050
acres of land. Four municipal utility districts, MUD Nos. 108, 109, 117 and
the District (collectively, the “Greatwood Districts”) have been created to
cover approximately all of such acres within Greatwood. The development of
the entirety of the developable land within all of Greatwood Districts is
complete. Single-family homes have been constructed on all of the single-family
residential lots that have been developed in the District and MUD Nos. 108,
109 and 117. As of October 1, 2009,
Greatwood contained an aggregate of approximately 4,125 homes (1,025 of which
are located within the District). The
proceeds of the sale of the bonds will refund three issues of currently
outstanding bonds (series 1997, 1998 and 1999) plus issuance costs. The
proposed term of the debt issuance is 12 years with level principal and
interest payments. The MUD is not extending its debt payment with this issue;
the principal of some of the refunded bonds is being paid earlier than the
original schedule. Principal payments
are proposed for 2010-2021, while the bonds refunded matured 2013-2021.
Preliminary figures show the district with a present value savings of 4.12%
of principal being refunded and average annual debt service savings of
approximately $16,900 for 12 years. |
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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: November 4, 2009
SUBJECT: Fort Bend County Municipal Utility
District No. 106
$4,195,000
Unlimited Tax Refunding Bonds, Series 2009
Fort
Bend County Municipal Utility District No. 106, a wholly incorporated District
within the extraterritorial jurisdiction of the City of Sugar Land is presenting
to the Mayor and City Council for consideration and approval of the proposed
sale of $4,195,000 of Unlimited Tax Refunding Bonds 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.
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.
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 |
Fort Bend
County Municipal Utility District No. 106 was created by the Texas Water Commission,
now the Texas Commission on Environmental Quality in 1989, and operates under
chapters 49 and 54 of the Texas Water Code.
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Location |
The District is located in entirely within
Fort Bend County approximately 4 miles southwest of the City of Sugar Land.
The District is located entirely within the extraterritorial jurisdiction of
Sugar Land and is adjacent to U.S. Highway 59, approximately 3.5 miles
southwest of the intersection of the Southwest Freeway and Texas State
Highway 6. |
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Acreage |
584.6 acres |
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Greatwood
Development |
The
District is part of the master-planned community known as Greatwood. Greatwood
consists of approximately 2,050 acres of land located entirely within the
extraterritorial jurisdiction of Sugar Land.
Four municipal utility districts, MUD Nos. 108, 109, 117 and the
District (collectively, the “Greatwood Districts”) have been created to cover
approximately all of such acres within Greatwood. The development of the
entirety of the developable land within all of Greatwood Districts is
complete. |
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Strategic
Partnership Agreement |
The Greatwood
Districts, including the District, have entered into a Strategic Partnership
Agreement (the “SPA”) with the City of Sugar Land. Under the SPA, certain portions of the land
within each of the Greatwood Districts have been annexed by the City for the
“limited purposes” of imposing sales tax and regulating by City ordinance the
use of real property (including the use, construction, alteration, and
maintenance of structures, buildings and signs). The SPA further provides
that the City, at its option, may annex any of the Greatwood Districts for
“full purposes” at anytime, but not later than the date all bonds of such
district, and of the other Greatwood Districts, are no longer
outstanding. Prior to the full purpose
annexation of a district, property within the District is not subject to the
City’s ad valorem property tax and district residents are not allowed to vote
in City elections for bond issues or charter amendments. When the District is annexed for full
purposes, the District is dissolved. In
connection with the SPA, MUD No. 106, in its capacity as Master District,
entered into a Groundwater Reduction Plan Participation Agreement with the
City for the Greatwood’s participation in the City’s Groundwater Reduction
Plan for compliance with Fort Bend Subsidence District groundwater reduction
requirements. |
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Status of
District Development |
The development of the entirety of the land located
within the District that is available for development is complete, including
approximately 358.94 acres within the District which have been subdivided
into 1,025 single-family residential lots. |
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Water
and Wastewater Utilities
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The Greatwood Districts obtains its water supply and wastewater treatment
from the District in its capacity as master district (the “Master District”).
Pursuant to a Contract for Financing, Operations and Maintenance of Regional
Water, Wastewater, and Storm Sewer Facilities dated February 1, 1999, the
Master District will construct or cause to be constructed water supply and
wastewater treatment facilities (the Master District Facilities”) in
consideration of the payment of charges (the “Connection Charge”) calculated
on the basis of a uniform charge made for each single-family equivalent
connection. |
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Total Bonds Authorized
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$27,000,000 for Water, Sanitary Sewer and Drainage $16,200,000 for
Refunding |
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Bonds
Outstanding
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$1,225,000 Series 1997 $2,695,000 Series 1998 $475,000 Series 1999 $4,555,000 Series 2004 $4,195,000 Series 2009
Refunding Bonds |
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Remaining Authorization
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$8,725,000 for Water, Sanitary Sewer and Drainage $15,440,000 for Refunding |
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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, without legal limitation as to rate or amount, levied against
all taxable property located within the District. |
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Municipal
Bond Rating and Insurance |
The underlying
credit rating of the District assigned by Standard and Poor’s is “A”. |
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2009 Tax
Rate (Per $100
Valuation) |
$0.42 Debt
Service $0.03 O & M $0.45 Tax Rate
Limitation: Debt
Service-Unlimited (no legal limit as to rate or amount) Maintenance
- $0.80/$100 Assessed Valuation |
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Unlimited
Tax Refunding Bonds, Series 2009 |
Principal
begin in 2010 for $80,000 and interest for $100,086. Term of Series is 12
years. |
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Maximum
Annual P & I (2021) |
$1,425,038 (Series
1997, Series 1998, Series 1999, Series 2004, Series 2009) |
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Average
Annual P & I (2010-2021) |
$1,396,640 (Series 1997,
Series 1998, Series 1999, Series 2004, Series 2009) |
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Use
of Proceeds from Bonds
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Proceeds of
the sale of the Bonds will be applied to currently refund the following:
The
proceeds will also be used to pay the cost of issuance on the Bonds. The sale of
the Bonds and the refunding of the Refunded Bonds will (i) reduce the
District’s debt service payments, and (ii) provide present value savings in
the District’s debt service for $202,662. |
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2009 Assessed Valuation
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$
338,624,663 |
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Tax Rate Requirement for Maximum and Average Debt Service (95% collection) |
Based
upon the 2009 Assessed Valuation, the required tax rate for the Maximum Debt
Service on the bonds is $0.45/$100 and the required tax rate for the Average
Debt Service payment on the bonds is also $0.44/$100 assuming a 95%
collection rate. |
DISTRICT DEBT
Debt Service Requirement Schedule
The following schedule sets
forth the debt service requirements for the Outstanding Bonds, less the debt
service requirements on the Refunded Bonds, plus the principal and estimated
interest requirements of the Bonds
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Plus: The Bonds |
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Less:
Debt |
Current Interest Bonds |
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Year Ending |
Current Total |
Service
on |
Principal |
Debt
Service |
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31-Dec |
Debt Service |
Refunded Bonds* |
(Due 9/1) |
Interest** |
Requirements |
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2010 |
$
1,406,803 |
$ 195,953 |
$
80,000 |
$
100,086 |
$
1,390,936 |
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2011 |
1,407,078 |
195,953 |
45,000 |
132,528 |
1,388,653 |
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2012 |
1,405,578 |
195,953 |
45,000 |
131,830 |
1,386,455 |
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2013 |
1,407,410 |
715,953 |
570,000 |
130,975 |
1,392,432 |
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2014 |
1,406,763 |
715,818 |
580,000 |
118,150 |
1,389,095 |
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2015 |
1,408,430 |
714,205 |
595,000 |
102,780 |
1,392,005 |
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2016 |
1,406,920 |
711,095 |
610,000 |
84,335 |
1,390,160 |
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2017 |
1,408,408 |
711,783 |
630,000 |
63,900 |
1,390,525 |
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2018 |
1,411,788 |
410,663 |
355,000 |
41,535 |
1,397,660 |
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2019 |
1,413,478 |
267,150 |
220,000 |
28,223 |
1,394,551 |
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2020 |
1,437,138 |
264,500 |
230,000 |
19,533 |
1,422,171 |
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2021 |
1,442,550 |
262,500 |
235,000 |
9,988 |
1,425,038 |
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Total |
$
16,962,344 |
$
5,361,526 |
$
4,195,000 |
$
963,863 |
$
16,759,681 |
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* Preliminary, subject to change |
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** Interest is estimated at
rates that vary from maturity to maturity |
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