Agenda No. 7.
CITY COUNCIL MEMORANDUM
| City Council Meeting: | October 22, 2019 |
| Department: | Finance |
| Subject: | Resolution 19-R-146 - Consideration and/or action of a Resolution approving a bond resolution 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, Series 2019 (San Antonio Water System Expansion Water Treatment Project 2)"; acknowledging that these obligations were sold to the authorized representative of a group of underwriters identified in the preliminary official statement pursuant to the provisions of a purchase contract; ratifying, reconfirming, and readopting the provisions of a mutual regional water supply contract executed between the City of Schertz, Texas, the City of Seguin, Texas, the Schertz/Seguin Local Government Corporation, and the City of San Antonio, Texas, acting by and through its San Antonio Water System; authorizing the Mayor, the City Secretary, and/or the City Manager 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/J. Walters) |
BACKGROUND
The Schertz/Seguin Local Government Corporation (SSLGC) was created on December 23,1998, on behalf of the Cities of Schertz and Seguin to assist in acquiring water outside of the Edwards Aquifer. Today the corporation has financed construction of well fields and pipelines that provides a reliable, drought-resistant water source for both cities and other municipalities.
Back in 2012, the San Antonio Water System (SAWS) wanted to connect to the SSLGC system. Since this was a good back up source of water and a potential customer, SSLGC agreed to issue $25,425,000 in bonds to build the connection if SAWS agreed to make the debt payments on their behalf. SAWS agreed and the bonds were issued under SSLGC's name in June 2012. Due to low interest rates, these bonds can now be refunded for a net savings of $2,185,000. Since SAWS is paying this debt, they will realize this savings.
Since the corporation is owned by the Cities of Schertz and Seguin, both cities must approve any bond sales, including refunding bonds.
The resolution tonight, in conjunction with a similar approval in Seguin expected on 11/5/2019, will allow SSLGC to issue to bonds on 11/20/2019 if they meet a minimum savings threshold.
Back in 2012, the San Antonio Water System (SAWS) wanted to connect to the SSLGC system. Since this was a good back up source of water and a potential customer, SSLGC agreed to issue $25,425,000 in bonds to build the connection if SAWS agreed to make the debt payments on their behalf. SAWS agreed and the bonds were issued under SSLGC's name in June 2012. Due to low interest rates, these bonds can now be refunded for a net savings of $2,185,000. Since SAWS is paying this debt, they will realize this savings.
Since the corporation is owned by the Cities of Schertz and Seguin, both cities must approve any bond sales, including refunding bonds.
The resolution tonight, in conjunction with a similar approval in Seguin expected on 11/5/2019, will allow SSLGC to issue to bonds on 11/20/2019 if they meet a minimum savings threshold.
GOAL
N/A
COMMUNITY BENEFIT
N/A
SUMMARY OF RECOMMENDED ACTION
Approve a resolution supporting the bond refunding for SSLGC.
FISCAL IMPACT
There will be no fiscal impact for the City of Schertz or the SSLGC with this resolution or this refunding bond sale, however, SAWS will recognize a savings on future bond payments.
RECOMMENDATION
Staff recommends approving Resolution 19-R-146.