Agenda No. 8.
CITY COUNCIL MEMORANDUM
| City Council Meeting: | October 17, 2023 |
| Department: | Executive Team |
| Subject: | Resolution No. 23-R-102 – 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 Improvement Bonds, New Series 2023”; acknowledging that these bonds 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. (S. Williams/ B. James/J. Walters/M. McLiney/A. Friedman) |
BACKGROUND
The Schertz/Seguin Local Government Corporation (the “SSLGC” or the “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 Corporation has $129,710,000 of Bonds outstanding that are supported by the two Cities.
The proposed $5,000,000 financing is intended to pay for the following projects: 1. Gonzales well improvements, 2. Gonzales WTP Pressure Filter Rehab, 3. Pipeline Condition Assessment; 4. Nockenut Site Erosion Control, and 5. Pipeline Survey and Appraisals.The annual debt service related to the financing has been incorporated into the future rate structure as determined by the Corporation’s rate consultant, Willdan, and included in the Corporation’s rate study.
SAMCO Capital Markets, the City’s and the Corporation’s Financial Advisor, proposes to sell the financing on October 24, 2023. To complete the transaction, the SSLGC Board will need to approve proceedings and then each City will need to ratify the SSLGC Board action. The SSLGC executive committee acted to begin proceeding with the financing at their September 5, 2023 meeting. The SSLGC Board authorized the parameter sale on September 21, 2023. The City of Seguin is authorizing the parameter sale resolution related to the financing on October 17, 2023. The City of Schertz will consider and act on a parameter sale resolution authorizing the Corporation to sell Bonds at their October 17, 2023 Council meeting. Only after both Cities approve the Resolutions can SSLGC proceed to a bond sale.
The proposed $5,000,000 financing is intended to pay for the following projects: 1. Gonzales well improvements, 2. Gonzales WTP Pressure Filter Rehab, 3. Pipeline Condition Assessment; 4. Nockenut Site Erosion Control, and 5. Pipeline Survey and Appraisals.The annual debt service related to the financing has been incorporated into the future rate structure as determined by the Corporation’s rate consultant, Willdan, and included in the Corporation’s rate study.
SAMCO Capital Markets, the City’s and the Corporation’s Financial Advisor, proposes to sell the financing on October 24, 2023. To complete the transaction, the SSLGC Board will need to approve proceedings and then each City will need to ratify the SSLGC Board action. The SSLGC executive committee acted to begin proceeding with the financing at their September 5, 2023 meeting. The SSLGC Board authorized the parameter sale on September 21, 2023. The City of Seguin is authorizing the parameter sale resolution related to the financing on October 17, 2023. The City of Schertz will consider and act on a parameter sale resolution authorizing the Corporation to sell Bonds at their October 17, 2023 Council meeting. Only after both Cities approve the Resolutions can SSLGC proceed to a bond sale.
GOAL
Approve the sale of bonds for the needed improvements to the SSLGC system.
COMMUNITY BENEFIT
The City of Schertz is a member of the SSLGC. It is through the SSLGC that the City provides water to its citizens. Approval of this funding application will ensure the future water needs of the city are met.
SUMMARY OF RECOMMENDED ACTION
Staff recommends approval of Resolution 23-R-102 as provided by bond counsel.
FISCAL IMPACT
The action and issuance of $5,000,000 of SSLGC debt will have a fiscal impact on the City of Schertz by increasing wholesale water rates the City pays to the Corporation by about $200,000 annually.
As mentioned this increase in cost was included in the rate studies conducted by SSLGC and the City and will not result in additional rate increases outside those recently approved. These rate increases are necessary to continue to provide the water that will be needed in the future
As mentioned this increase in cost was included in the rate studies conducted by SSLGC and the City and will not result in additional rate increases outside those recently approved. These rate increases are necessary to continue to provide the water that will be needed in the future
RECOMMENDATION
Approval of Resolution 23-R-102.
Wording of 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 IMPROVEMENT BONDS, NEW SERIES 2023”
Wording of 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 IMPROVEMENT BONDS, NEW SERIES 2023”