Agenda No. 6.
CITY COUNCIL MEMORANDUM
| City Council Meeting: | January 11, 2022 |
| Department: | Public Works |
| Subject: | Resolution No. 22-R-10 - Consideration and approval of a Resolution by the Schertz City Council approving a Bond Resolution previously adopted by the Board of Directors of the Schertz/Seguin Local Government Corporation authorizing the issuance of obligations designated as “Schertz/Seguin Local Government Corporation Contract Revenue Refunding Bonds, Taxable New Series 2022”; acknowledging that these obligations will be sold pursuant to the provisions of a purchase contract; ratifying, reconfirming, and readopting the provisions of a Regional Water Supply Contract executed between the City of Schertz, Texas, the City of Seguin, Texas, and the Schertz/Seguin Local Government Corporation; authorizing the Mayor, the City Manager, and the City Secretary of the City of Schertz, Texas to execute on behalf of the City of Schertz, Texas all documents in connection with this transaction; and other matters in connection therewith. (C. Kelm/S.Williams/M. McLiney) |
BACKGROUND
The Schertz/Seguin Local Government Corporation was created on December 23, 1998 on behalf of the City of Schertz and Seguin to assist in acquiring water outside of the Edwards Aquifer. The Corporation was created by the Cities to operate a wholesale water system for the benefit of the two City’s Utility Systems. The Corporation has financed the construction of well fields and cross-country pipelines and today provides a reliable, drought-resistant water source. The Bonds are supported by Contracts between the Cities and the Corporation, and the liability is evenly split between the two Cities. Currently, the LGC has $130,515,000 of Bonds outstanding that are supported by the two Cities of which a portion of the Series 2014 and 2015 can be refunded for savings.
GOAL
To reduce overall project costs by refinancing existing indebtedness at a lower interest rate.
COMMUNITY BENEFIT
Rates paid pursuant to the Contract are tied to debt service payments on the Corporation's indebtedness. Savings from the refunding will result in lower payments under the terms of the Contract.
SUMMARY OF RECOMMENDED ACTION
Approve Resolution No. 22-R-10.
FISCAL IMPACT
Due to the low current interest rates a portion of the Series 2014 and 2015 can be Refunded for savings. We currently estimate that the Refunding will save the SSLGC approximately $5,400,000 over the life of the Bonds. Since the Cities benefit equally, the savings amount to an approximate $2,700,000 benefit to the City of Schertz.
SAMCO Capital Markets, the City’s and the Corporation’s Financial Advisor, proposes to sell the refunding bonds on or about January 25, 2022. The SSLGC Board approved their resolution at their December 16, 2021 meeting and the City of Seguin ratified the SSLGC Board action at their December 21, 2021 meeting. To complete the transaction, the City will need to ratify the SSLGC Board action this action item.
Only after the both Cities approve the Resolution can the SSLGC proceed to a bond sale.
SAMCO Capital Markets, the City’s and the Corporation’s Financial Advisor, proposes to sell the refunding bonds on or about January 25, 2022. The SSLGC Board approved their resolution at their December 16, 2021 meeting and the City of Seguin ratified the SSLGC Board action at their December 21, 2021 meeting. To complete the transaction, the City will need to ratify the SSLGC Board action this action item.
Only after the both Cities approve the Resolution can the SSLGC proceed to a bond sale.
RECOMMENDATION
City Staff and consultants recommend that the City Council adopt Resolution No. 22-R-10 approving the sale of the Refunding Bonds so long as certain savings targets can be met as outlined in the Resolution before the Council and ratifying the Corporation’s action authorizing the sale of Bonds on December 16, 2021.
Suggested Motion:
I MOVE THAT THE CITY COUNCIL APPROVE A RESOLUTION APPROVING A BOND RESOLUTION PREVIOUSLY ADOPTED BY THE BOARD OF DIRECTORS OF THE SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION AUTHORIZING THE ISSUANCE OF BONDS DESIGNATED AS “SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION CONTRACT REVENUE REFUNDING BONDS, TAXABLE NEW SERIES 2022”
Suggested Motion:
I MOVE THAT THE CITY COUNCIL APPROVE A RESOLUTION APPROVING A BOND RESOLUTION PREVIOUSLY ADOPTED BY THE BOARD OF DIRECTORS OF THE SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION AUTHORIZING THE ISSUANCE OF BONDS DESIGNATED AS “SCHERTZ/SEGUIN LOCAL GOVERNMENT CORPORATION CONTRACT REVENUE REFUNDING BONDS, TAXABLE NEW SERIES 2022”