17-APPROVE RES DIRECTING CITY CLERK TO PUBLISH NOTICE OF INTENT TO ISSUE COMBINATION TAX AND SURPLUS REVENUE CERTIFICATES OF OBLIGATIONSubmittal Date:
12/4/12
Council Date:
12/10/12
CITY COUNCIL AGENDA ITEM BRIEFING SHEET
Originating Department: I Ptesented By:
City Manager � John Godwin
Agenda Item No.:
17.
RECOMMENDED MOTION:
Approve a resolution directing the City Clerk to publish notice of intent to issue Combination Tax and
Surplus Revenue Certificates of Obligation in the maximum amount of $2,900,000 for the purpose of
funding costs of water system improvements.
POLICY ISSUE�S�:
Publication
BACKGROUND:
• Pre-application for low interest loan submitted in spring 2012.
• City council approved contracts with Hayter Engineering (application prep and engineering), South-west
Securities (bond advisors), and McCall Parkhurst (bond counsel) on May 14, 2012.
• City qualifies for 15% loan forgiveness.
� Council approved submission of loan application on May 31.
• Texas Water Development Board approved loan in late September 2012.
• Negotiated sale of certificates of obligation is required as preferred funding mechanism by TWDB to ensure
low interest rate and to offer loan forgiveness.
• Certificate of obligation sale must be noticed in newspaper.
• Council tabled notice on November 26.
• Loan program participation would save $1,359,330 over 20 years, versus GO or traditional CO sale.
• Loan program participation would save $211,917 over paying cash.
• Sale of COs is a very common, open, and public action taken by city councils.
• No duplication of engineering work between Hayter and KSA.
• 15 water line replacement projects will be part of 10-year CIP regardless of type of financing.
•$3.4 million can be in addition to or a part of $50 million projected CIP cost.
BOARD�COMMISSION RECOMMENDATION:
EXHIBITS:
Resolution, Combination Tax & Revenue Certificates of Obligation
ACTION:
❑ Financial Report ❑ Minute Order
❑ Department Report � Resolution
❑ Presentation ❑ Ordinance
❑ Public Hearing ❑ Other
FISCAL NOTES:
BUDGET INFO:
Expense $
Budgeted Amt. $
YTD Actual $
Acct. Name
Acct. Number
City of Paris Revised 6/20/12
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RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS,
TEXAS; AUTHORIZING PUBLICATION OF NOTICE OF INTENTION
TO ISSUE COMBINATION TAX AND SURPLUS REVENUE
CERTIFICATES OF OBLIGATION; MAKING OTHER FINDINGS AND
PROVISIONS RELATED TO THE SUBJECT; AND DECLARING AN
EFFECTIVE DATE.
WHEREAS, the City Council deems it advisable to give notice of intention to issue
certificates of obligation of the City of Paris, Texas, as hereinafter provided; and,
WHEREAS, it is hereby officially found and determined that the meeting at which this
Resolution was passed was open to the public and public notice of the time, place and purpose of
said meeting was given, all as required by Chapter 551 Texas Government Code.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF PARIS, TEXAS, THAT:
Section 1. The findings set out in the preamble to this resolution are hereby in all things
approved.
SecNon 2. Attached hereto is a form of the Notice of Intention to issue Certificates of
Obligation, the form and substance of which is hereby adopted and approved.
Section 3. The City Clerk shall cause said notice to be published in substantially the
form attached hereto, in a newspaper of general circulation in said City, and published in the City,
on the same day in each of two consecutive weeks, the date of the first publication thereof to be at
least 30 days prior to the time set for the issuance of such certificates of obligation as shown in said
notice.
Section 4. This resolution shall be effective immediately upon passage.
DULY PASSED AND APPROVED this l Oth day of December, 2012.
A.J. Hashmi, M.D., Mayor
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ATTEST:
Janice Ellis, City Clerk
APPROVED AS TO FORM:
W. Kent McIlyar, City Attorney
'7 2
CITY OF PARIS, TEXAS
NOTICE OF INTENTION TO ISSUE COMBiNATION TAX AND SURPLUS REVENUE
CERTIFICATES OF OBLIGATION
The City of Paris does hereby give notice of intention to issue one or more series of Combination
Tax and Surplus Revenue Certificates of Obligation, in the maximum principal amount not to
exceed $2,900,000, for paying all or a portion of the City's contractual obligations incurred to
provide funds to pay costs of improving the City's potable water distribution system, to-wit: water
line replacements for the City's potable water distribution system and to pay legal, fiscal,
engineering and architectural fees in connection with such project. The City proposes to adopt an
ordinance that will provide for the Certificates of Obligation to be secured by a pledge of funds
received from the levy and collection of ad valorem taxes in the City, as provided by law, and from
a pledge of the surplus net revenues of the City's water and sewer system (the "System") that
remain after payment of all operation and maintenance expenses thereof, and after all debt service,
reserve, and other requirements in connection with all revenue bonds or other obligations (now or
hereafter outstanding) of the City have been met, to the extent that such obligations are payable
from all or any part of the net revenues of the System. The City Council intends to consider for
passage at a meeting to be held at 5:30 P.M. on January 14, 2013, at the Paris City Hall, 135 1 st
Street SE, Paris, Texas, an ordinance authorizing the issuance of Combination Tax and Surplus
Revenue Certificates of Obligation.
CITY OF PARIS, TEXAS
:
'7 3
A.J. Hashmi, M.D., Mayor
CERTIFICATE FOR RESOLUTION
THE STATE OF TEXAS
COUNTY OF LAMAR
CITY OF PARIS
,
We, the undersigned officers of the City of Paris (the "City"), hereby certify as follows:
1. The City Council of the City (the "City Council") convened in REGULAR MEETING
ON THE IOTH DAY OF DECEMBER, 2012, at the designated meeting place, and the roll was
called of the duly constituted officers and members of the City Council, to wit:
A.J. Hashmi, Mayor
Richard Grossnickle, Mayor Pro-tem
Aaron Jenkins, Councilmember District 1
Billie Sue Lancaster, Councilmember District 2
John Wright, Councilmember District 3
Matt Frierson, Councilmember District 5
Cleonne Holmes Drake, Councilmember District 6
Janice Ellis, City Clerk
and all of said persons were present, except the following absentees: ,
thus constituting a quorum. Whereupon, among other business, the following was transacted at
said Meeting: a written
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARIS, TEXAS;
AUTHORIZING PUBLICATION OF NOTICE OF INTENTION TO ISSUE TAX
AND SURPLUS REVENUE CERTIFICATES OF OBLIGATION; MAKING
OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT; AND
DECLARING AN EFFECTNE DATE.
was duly introduced for the consideration of the City Council. It was then duly moved and
seconded that the Resolution be adopted and, after due discussion, said motion, carrying with it the
adoption of the Resolution, prevailed and carried by the following vote:
AYES: All members of the City Council shown present above voted "Aye," except as
shown below:
NOES:
'7 4
ABSTAIN:
2. That a true, full and correct copy of the aforesaid Resolution adopted at the Meeting
described in the above and foregoing paragraph is attached to and follows this Certificate; that the
Resolution has been duly recorded in the City Council's minutes of the Meeting; that the above and
foregoing paragraph is a true, full and correct excerpt from the City Council's minutes of the
Meeting pertaining to the adoption of the Resolution; that the persons named in the above
and foregoing paragraph are the duly chosen, qualified and acting officers and members of the
City Council as indicated therein; that each of the officers and members of the City Council was
duly and sufficiently notified officially and personally, in advance, of the time, place and purpose
of the aforesaid Meeting, and that the Resolution would be introduced and considered for adoption
at the Meeting, and each of the officers and members consented, in advance, to the holding of the
Meeting for such purpose, and that the Meeting was open to the public and public notice of the
time, place and purpose of the meeting was given, all as required by Chapter 551, Texas
Government Code.
3. That the Mayor of the City (or the Mayor Pro-tem in the absence of the Mayor) has
approved and hereby approves the aforesaid Resolution; and that the Mayor (or the Mayor Pro-tem
in the absence of the Mayor) and the City Clerk of the City hereby declare that their signing of this
Certificate shall constitute the signing of the attached and following copy of the Resolution for all
purposes.
(SEAL)
SIGNED AND SEALED the I Oth day of December, 2012.
City Clerk
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BOND DEBT SERVICE
Proposed $2,89Q000
CITY OF PARIS, TEXAS
Combination Tax and Revenue Certificates of Obligation, Senes 2013
(TWDB - DWSRF Loan)
(19.5 Yeazs Level Debt a 1.00%)
Da[edDate 02/IS/2013
Delivery Date 02/15/2013
Penod Annual
Ending Principal Coupon Interest Deb[ Service Debt Service
06/15/2013 1OQ000 I.000% 33333 100,33333
09/30/2013 l OQ33333
12/15/2013 23,25Q00 23,25Q00
06/i5/2014 125,000 1.000% 13,950.00 138,950.00
09/30/2014 162,200.00
12/ L 5/2014 13,325.00 13,325.00
06/l5/2015 135,000 I.000% 13,325.00 148,325.00
09/30/2015 161,650.00
I 2/ I 5/20 I 5 12,650.00 12,650.00
06/15/2016 135,000 L000% 12,650.00 147,650.00
09/30/2016 160,300.00
12/15/2016 11,975.00 11,975.00
06/15/2017 140,000 1.000% 11,975.00 151,975.00
09/30/2017 163,950.00
12/15/2017 11,275.00 11,275.00
O6/15/2018 140 000 I.000% 11,275.00 151,275.00
09/30/2018 162,550.00
L2/15/2018 10,575.00 I 0,575.00
06/15/2019 140,000 I.000% IQ575.00 15Q575.00
09/30/2019 161,150.00
12/15/2019 9,875.00 9,875.00
O6/15/2020 145,000 I.000% 9,875.00 154,875.00
09/30/2020 164,750.00
12/15/2020 9,150.00 QI50.00
OG/15/2021 145,000 I.000% 9,150.00 154,150.00
09/30/202 I I 63,300.00
12/IS/2021 8,425.00 8,425.00
06/15/2022 145,000 1.000% 8,425.00 153,425.00
09/30/2022 I61,850.00
12/15/2022 7,700.00 7,700.00
06/15/2023 145,000 1.000% 7,700.00 152,700.00
09/30/2023 160,400.00
12/IS/2023 6,975A0 6,975.00
06/]5/2024 I50,000 1.000% 6,975.00 156,975.00
09/30/2024 163,950.00
12/15/2024 6,225.00 6,225.00
06/15/2025 I50,000 I.000% 6,225.00 156,225.00
09/30/2025 162,450.00
12/15/2025 5,475.00 5,475.00
O6/15/2026 150,000 I.000% 5,475.00 155,475.00
09/30/2026 16Q950.00
12/15/2026 4,725.00 4,725.00
06/15/2027 155,000 I.000% 4,725.00 159,725.00
09/30/2027 164,450.00
12/15/2027 3,950.00 3,950.00
06/15/2028 155,000 I.000% 3,950.00 158,950.00
09/30/2028 162,900.00
12/l5/2028 3,175.00 3,175.00
O6/15/2029 I55,000 I.000% 3,175.00 158,175.00
09/30/2029 161,350.00
12/15/2029 2,400.00 2,400.00
06/15/2030 I60.000 1.000% 2,400.00 162,400.00
09/30/2030 164,800.00
12/15/2030 1,600.00 1,600.00
06/15/2031 160,000 I.000% I,600.00 161,600.00
09/30/203 I I 63,200.00
l2/15/2031 800.00 800.00
06/15/2032 16Q000 L000% 800.00 160,800.00
09/30/2032 161,600.00
2,89Q000 298,08333 3,188083.33 3,188,083.33
Jun 6, 2012 2:07 pm Prepared by DBC Finance
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(Finance 7.001 Paris, City o£PARISGO-2012TWB1) Page 1
BOND DEBT SERVICE
Proposed $3,400,000
CITY OF PARIS, TEXAS
Combination Tax and Revenue Certificates of Obligation, Series 2013
(Sold in the Open Market)
(195 Years Level Debt �i�, 3.10%)
DatedDate 02/IS/2013
DeliveryDate 02/IS/2013
Period Annual
Ending Principal Coupon Interes[ Debt Service Debt Service
06/15/2013 110,000 3.100% 35,13333 145,13333
09/30/2013 145,13333
l2/15/2013 SQ995.00 50.995.00
06/IS/2014 130,000 3.100% 50,995.00 180.995.00
09/30/2014 231,990.00
12/l5/2014 48,980.00 48.980.00
06/l5/2015 135,000 3J00% 48,980.00 183.980.00
09/30/2015 232,960.00
12/15/2015 46,887.50 46,887.50
06/IS/2016 140,000 3.100% 46,887.50 186.887.50
09/30/2016 233,775.00
12/15/2016 44,717.50 44,717.50
06/15/2017 145,000 3.100% 44,717.50 189.717.50
09/30/2017 234,435A0
12/IS/2017 42,470.00 42470.00
06/15/20]8 145,000 3.100% 42,470.00 187.470.00
09/30/2018 229,940.00
12/15/2018 4Q222.50 40.222.50
06/IS/2019 150,000 3.100% 4Q222.50 190222.50
09/30/2019 23Q445.00
12/IS/2019 37,897.50 37.897.50
06/LS/2020 155,000 3.100% 37,89Z50 192.897.50
09/30/2020 230,795.00
12/IS/2020 35,495.00 35495.00
06/l5/2021 16Q000 3.100% 35,495.00 L95495.00
09/30/2021 230,990.00
12/l5/2021 33,015.00 33.015.00
O6/IS/2022 165,000 3.100% 33,015.00 198015.00
09/30/2022 231,030.00
12/15/2022 30,457.50 30.457.50
06/IS/2023 170,000 3.100% 3Q457.50 200,457.50
09/30/2023 23Q915.00
12/IS/2023 27,822.50 27.822.50
O6/15/2024 I75,000 3.100% 27,822.50 202.822.50
09/30/2024 23Q645.00
12/15/2024 25,110.00 25.110.00
06/15/2025 18Q000 3.100% 25,110.00 205J10.00
09/30/2025 230,220.00
L2/15/2025 22,320.00 22.320.00
06/LS/2026 185,000 3.100% 22,32Q00 207.320.00
09/30/2026 229,640.00
12/ I 5/2026 19,45250 19.452.50
06/15/2027 195,000 3.100% 19,452.50 214452.50
09/30/2027 233,905.00
12/15/2027 16,430.00 16 430.00
06/IS/2028 200,000 3.100% 16,430.00 216.430.00
09/30/2028 232,860.00
12/15/2028 13.330.00 13330.00
06/15/2029 205,000 3.100% 13,330.00 218.330.00
09/30/2029 231,660.00
12/ 15/2029 I Q 152. SO 10, I 52.50
06/15/2030 210,000 3.100 % I Q 152.50 220.152.50
09/30/2030 230,305.00
12/15/2030 6,897.50 6,897.50
06/15/2031 22Q000 3.100% 6,897.50 226.897.50
09/30/2031 233,795.00
12/15/2031 3,48Z50 3.487.50
06/IS/2032 225,000 3.100% 3,48Z50 228.487.50
09/30/2032 231,975.00
3,400,000 1,147,41333 4,547.413.33 4,547,41333
Nov 3Q 2012 11:30 am Prepared by DBC Finance
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(Finance 7.002 Paris, City of.PARISGO-2013PUB) Page L
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
�•
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
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duplication of work (i.e. KSA does not need to evaluate or estimate costs for the fifteen projects already
analyzed by Hayter). They will simply work those projects into the overall CIP, and doing so will actually
save them a little bit of time. They are familiar with and fully supportive of the DWSRF loan.
The council can either include the $3.4 million within the $50 million we tentatively talked about and
instructed KSA to plan for, or we can simply add the $3.4 million to the $50 million. I generally prefer
the latter, but in either case, I recommend that we proceed with the loan as agreed upon in May.
Should the council need more information or more time, the December 10 agenda item seeks only to
authorize advertising the issuance of certificates of obligation, so we could proceed with that step alone,
and still change our minds later if desired.
• '
TWDB LOAN: EXECUTIVE SUMMARY
• Pre-application for low interest loan submitted in spring 2012.
• City council approved contracts with Hayter Engineering (application prep and engineering), South-
west Securities (bond advisors), and McCall Parkhurst (bond counsel) on May 14, 2012.
• City qualifies for 15% loan forgiveness.
• Council approved submission of loan application on May 31.
• Texas Water Development Board approved loan on September 20.
• Negotiated sale of certificates of obligation is required as preferred funding mechanism by TWDB to
ensure low interest rate and to offer loan forgiveness.
� Certificate of obligation sale must be noticed in newspaper.
• Council tabled publishing notice on November 26.
• Loan program participation would save $1,359,330 over 20 years, versus GO or traditional CO sale.
• Loan program participation would save $211,917 over paying cash.
• Sale of COs is a very common, open, and public action taken by city councils.
• No duplication of engineering work between Hayter and KSA.
• 15 water line replacement projects will be part of 10-year CIP regardless of type of financing.
• $3.4 million can be in addition to or a part of $SO million projected CIP cost.
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