Agenda No. 4.
CITY COUNCIL MEMORANDUM
| City Council Meeting: | August 10, 2021 |
| Department: | Finance |
| Subject: | Ordinance No. 21-E-29 - Consideration and/or action approving an Ordinance calling a bond election to be held by the City of Schertz, Texas on November 2nd, 2021. First & Final (M. Browne/J. Walters) |
BACKGROUND
Cities have the ability to call for an election to approve debt issuance for capital infrastructure. If passed at the election this debt can be issued anytime in the future by the City Council.
As the City continues to grow additional fire safety infrastructure is needed as well. In 2017, a study was conducted to determine the best locations to put future fire stations to improve readiness. This study by Mike Pietsch, P.E. Consulting Services Inc., identified a need for another station in the industrial area.
A new station in the industrial area will also increase the City's Insurance Service Offering (ISO) Rating which will lower fire insurance for businesses and residents in Schertz. Getting to an ISO #1 rating would lower commercial fire insurance by 2% and residential by 1%. Both San Antonio and New Braunfels are ISO #1 cities, which make them more attractive for prospective businesses.
To construct this fire station, staff estimates a combine cost of land, building, and equipment would cost $15,450,000 and staff proposes to issue debt to fund the project.
The City can issue debt for capital infrastructure, such as a fire station, by issuing debt call Certificates of Obligation that council can use without a vote by the citizens or can issue General Obligation bonds that have been voted on by the Citizens. The debt for the new fire station is proposed to be voted on and issue by General Obligation bonds. If the vote fails, council cannot issue Certificates of Obligation to build a fire station anyway for at least 2 years.
As the City continues to grow additional fire safety infrastructure is needed as well. In 2017, a study was conducted to determine the best locations to put future fire stations to improve readiness. This study by Mike Pietsch, P.E. Consulting Services Inc., identified a need for another station in the industrial area.
A new station in the industrial area will also increase the City's Insurance Service Offering (ISO) Rating which will lower fire insurance for businesses and residents in Schertz. Getting to an ISO #1 rating would lower commercial fire insurance by 2% and residential by 1%. Both San Antonio and New Braunfels are ISO #1 cities, which make them more attractive for prospective businesses.
To construct this fire station, staff estimates a combine cost of land, building, and equipment would cost $15,450,000 and staff proposes to issue debt to fund the project.
The City can issue debt for capital infrastructure, such as a fire station, by issuing debt call Certificates of Obligation that council can use without a vote by the citizens or can issue General Obligation bonds that have been voted on by the Citizens. The debt for the new fire station is proposed to be voted on and issue by General Obligation bonds. If the vote fails, council cannot issue Certificates of Obligation to build a fire station anyway for at least 2 years.
GOAL
To send a bond proposition to the voters on Fire Station #4.
COMMUNITY BENEFIT
This would increase fire fighting response to the industrial sector that can help secure jobs and support business located in the city.
SUMMARY OF RECOMMENDED ACTION
Staff recommends council approve this ordinance and put this proposition on the November 2, 2021 ballot.
FISCAL IMPACT
Based on modeled growth in the City, staff believes issuing these bonds in 2022 will not result in a tax rate increase.
By issuing the $15,450,000 in debt, these payments are expected to be around $990,000 in annual payments. These payments will be made out of the City's Interest & Sinking Fund which is funded through taxes raised to pay debt. These taxes are separate from those the pay for the day to day operations of the City.
By issuing the $15,450,000 in debt, these payments are expected to be around $990,000 in annual payments. These payments will be made out of the City's Interest & Sinking Fund which is funded through taxes raised to pay debt. These taxes are separate from those the pay for the day to day operations of the City.
RECOMMENDATION
Staff recommends approval of Ordinance 21-E-29 - Motion "I____move that the City of Schertz, Texas adopt an ordinance calling a Bond Election in the amount of $15,450.000".