Agenda No.
CITY COUNCIL MEMORANDUM
| City Council Meeting: | January 21, 2025 |
| Department: | Finance |
| Subject: | Discussion and consideration of forthcoming financing of Schertz/Seguin Local Corporation Bond Issuance (S.Gonzalez/J.Walters) |
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 $130,890,000 of Bonds outstanding that are supported by the two Cities. The proposed financing is intended to pay for a portion of the Fiscal year 2025 CIP including: Well projects, WTP Projects, WTP Surge tank, SCADA improvements and other larger capital improvement items.
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 or about March 5, 2025. 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 Board acted to begin proceeding with the financing at their December 19, 2024 meeting. The SSLGC Board plans to authorize the parameter sale on January 16, 2025. The City of Seguin is authorizing the parameter sale resolution related to the financing on February 18, 2025. The City of Schertz will consider and act on a parameter sale resolution authorizing the Corporation to sell Bonds at their February 18, 2025 Council meeting. Only after both Cities approve the Resolutions can SSLGC proceed to a bond sale.
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 or about March 5, 2025. 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 Board acted to begin proceeding with the financing at their December 19, 2024 meeting. The SSLGC Board plans to authorize the parameter sale on January 16, 2025. The City of Seguin is authorizing the parameter sale resolution related to the financing on February 18, 2025. The City of Schertz will consider and act on a parameter sale resolution authorizing the Corporation to sell Bonds at their February 18, 2025 Council meeting. Only after both Cities approve the Resolutions can SSLGC proceed to a bond sale.
GOAL
To review proposed bond issuance and answer questions regarding the bonds prior to issuance.
COMMUNITY BENEFIT
Support of SSLGC capital improvements helps safeguard Schertz' current and future water supply.
SUMMARY OF RECOMMENDED ACTION
City Staff and consultants recommend that the City Council proceed with the financing and prepare to consider a Parameter Sale Resolution at the February 18, 2025 City Council meeting.
RECOMMENDATION
City Staff and consultants recommend that the City Council proceed with the financing and prepare to consider a Parameter Sale Resolution at the February 18, 2025 City Council meeting.