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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TWDB LOAN The Texas Water Development Board (TWDB) was created in 1957 to plan for the state's water resources and help ensure affordable water and wastewater services. To accomplish its mission, the TWDB provides water planning, data collection and dissemination, and financial and technical assistance. One tool it uses to provide financial assistance is a forgivable loan program, known as the Drinking Water State Revolving Fund (DWSRF). Through the DWSRF, the TWDB makes low-interest loans to help finance public drinking water systems that facilitate compliance with primary and secondary drinking water regulations. DWSRF loans can finance costs associated with the planning, design, and construction of projects to upgrade or replace water supply infrastructure, to correct exceedances of health standards, to consolidate water supplies, and to purchase water system capacity. DWSRF loans are at interest rates much lower than the market can offer to eligible applicants. Initially, the DWSRF offers 20-year loans with a net long-term interest rate that is effectively 1.2 percent below the rate the borrower would receive on the open market at the time of closing. This interest rate reduction equates to a savings of approximately $165,000 per $1 million borrowed during the life of a loan. Paris anticipates a much lower interest rate even than that. Early in 2012 the city staff identified fifteen water line projects that met the loan program requirements and began the process of evaluating the possibility of acquiring loan funds to replace these old, frequently leaking water lines, which were among the very worst in the city. In addition to a potential cost saving through the very low interest the TWDB's program offered, there was also the possibility of loan forgiveness, meaning the city might not have to pay back all it received. A pre-application was submitted for these projects in the spring, and on May 14 Shawn Napier appeared before the city council to request approval of three separate resolutions. Resolution 2012-SO approved a professional services contract with Hayter Engineering to provide design services for the fifteen projects, in the amount of $172,972. Resolution 2012-51 ratified a contract with McCall Parkhurst & Horton for bond counsel services in the amount of $17,000. Resolution 2012-52, in the amount of $19,748, approved a professional services agreement with Southwest Securities to provide financial advisory services related to the proposed bond sale. All three resolutions were unanimously approved by the city council, and following their execution, work was begun. On May 31, Mr. Napier again appeared before the council, seeking authorization to submit the actual application for $3.4 million. Because the state approved Paris's project as a"green" application, it qualified for an approximate 15% loan forgiveness, which equated to $500,778 we would receive but not have to pay back to the TWDB. As a result, not only would the city save a significant amount of money through the very low effective interest rate offered by the state, but we could save over half a million in forgiveness, �lus the interest that would otherwise have accrued on that $500,778. The �•