17-APPROVE RES DIRECTING CITY CLERK TO PUBLISH NOTICE OF INTENT TO ISSUE COMBINATION TAX AND SURPLUS REVENUE CERTIFICATES OF OBLIGATION

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council unanimously approved submission of the application, which was completed prior to the June 25 deadline. We received word on September 24 that our application was approved by the TWDB as part of their September 20 consent agenda. At that point, Hayter began more detailed work on several of the fifteen projects, including surveying, and our bond counsel and financial advisors began actual work as well, in preparation for a sale of certificates of obligation. The use of COs in this case is determined by the TWDB as a convenient and efficient financing tool. These are not traditional COs that are bid on and sold publicly to financial institutions, but instead this would be a private, negotiated sale to the TWDB. In that way they can offer the very low effective interest rate and the 15% loan forgiveness. This financing tool has been used by the TWDB for many years in a host of cities and special districts. Locally, the Lamar County Water Supply Corporation has participated successfully in the program, and Hayter has worked with a number of water providers utilizing state money as well. This financing also reduces bond issuance costs associated with a traditional public sale. In fact, the only costs of issuance we would have are for financial advisory and bond counsel services, both of which are reimbursable expenses from the loan. On November 26, Mr. Napier appeared before the council again to request authorization for the city clerk to place appropriate advertising in the newspaper as required when issuing certificates of obligation. Besides our failure to explain the matter as clearly as we might have, two major concerns were raised: the issuance of certificates of obligation and possible duplication of engineering work related to the recently-approved KSA contract. I fully understand the concern over the possible public perception of COs, but Paris has used certificates almost exclusively for its capital needs since 1984 and all such issuances require significant public notice and action (the very reason for the November 26 agenda item). The ability to save a significant amount of money to get these projects completed does, I believe, more than outweigh any possible negativity related to COs. In fact, our financial advisor prepared the attached comparative data for repaying $3.4 million at a likely rate for general obligation bonds on the open market, versus $2.89 million at the approximately 1% we anticipate through the TWDB. The total 20-year savings would be $1,359,330, or an average of $67,967 per year. By beginning construction around August 2013, we would also more quickly get rid of the old water lines and save maintenance and opportunity costs associated with frequent leaks. In regard to possible duplication of effort, please remember that KSA has not been contracted to do any design work. Their job is to prepare a 10-year plan, identifying worthy projects, estimating the likely costs of those projects, and then, with the assistance of a citizen committee and city staff, placing those projects into some sort of rank order for use as a work plan. All of the projects they identify will still require some sort of engineering design, possibly by KSA under additional contract(s), but just as likely through other engineering firms like Hayter (plus a few smaller projects that will be designed in-house). We have met with KSA engineers and discussed the TWDB loan status, as well as the need to avoid any ��