HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 10/07/2008 - FIRST READING OF ORDINANCE NO. 117, 2008, APPROPRI ITEM NUMBER: 12
AGENDA ITEM SUMMARY DATE: October 7, 2008
FORT COLLINS CITY COUNCIL STAFF: Chuck Seest
Terri Bryant
SUBJECT
First Reading of Ordinance No. 117,2008,Appropriating Proceeds from the Issuance of City of Fort
Collins, Colorado, Water Utility Enterprise, Water Revenue Refunding Bonds, Series 2008, in the
Maximum Aggregate Principal Amount of$19,000,000.
RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
FINANCIAL IMPACT
The Ordinance would appropriate in the Water Utility Fund proceeds from bonds proposed to be
issued in Ordinance No. 006, of the Board of the Water Utility Enterprise, for the purpose of
refunding,paying and discharging all of the Enterprise's outstanding Revenue Refunding Bonds and
Improvement Bonds,Series 1998. The bonds being refunded have interest rates of 4.25%to 4.75%;
the new bonds would result in an average interest rate of approximately 3.50%. Overall, the
transaction is estimated to yield cashflow savings of$1.2 million and net present value savings of
$1 million.
EXECUTIVE SUMMARY
After the regular Council meeting tonight,the Board of the Water Utility Enterprise will consider
an ordinance which authorizes the issuance of City of Fort Collins Colorado, Water Utility
Enterprise, Water Revenue Refunding Bonds, Series 2008, in the Maximum Aggregate Principal
Amount of $19,000,000. The Bonds will be issued to refund, pay and discharge all of the
outstanding Water Revenue Refunding Bonds and Improvement Bonds, Series 1998.
The City will be paying off higher cost bonds with new bonds that will have lower interest rates.
The passage of Amendment 1 (the TABOR Amendment)by the Colorado voters in 1992,required
the City to form enterprises in order for its utilities to be able to issue municipal bonds without an
election. Since that time, all utility bonds have been issued by the appropriate utility enterprise.
However,the City Charter grants only the Council the power to appropriate the funds. Therefore,
this action by the Council is necessary in order to appropriate the bond proceeds for the Water
Utility. Authorizing the issuance of the bonds and appropriating the proceeds are both necessary
to complete the bond transaction. The final rates will be determined by selling the bonds at a
competitive sale later this year.
October 7, 2008 -2- Item No. 12
ATTACHMENTS
1. Council Finance Committee minutes - September 15, 2008.
2. Excerpt from the Water Board Minutes - September 25, 2008.
ATTACHMENT 1
City Of Finance Administration
215 N. Masan
2ntl Floor
PO Box 580
Fort Collins 9Fort Collins,
0 21.6 88080522
970.221.6782-fax
fcgov.com
Council Finance Committee
Minutes
09/15/08
10:30 a.m - 12:00 p.m.
Council Attendees: Mayor Doug Hutchinson, Councilmember Ben
Marvel, Councilmember Kelly Ohlson
City Staff Attendees: Darin Atteberry, Kraig Ecton, Mike Freeman,
Chuck Seest, Heather Shepherd, John Voss
Others: Ann Hutchinson from the Chamber of Commerce;
Julia Stone from Bondi £t Co., LLC
Approval of the Minutes from the August 30th meeting.
Minutes were approved.
Briefing on Refunding of water bonds
Chuck gave an update to the Committee regarding the 1998 Water Bonds that are now
approaching their 10 year call date and are eligible for refunding. According to James
Capital, the City's financial advisor, the refunding of the $18.6 million of bonds would
result in net savings of approximately $1.0-$1.2 million for the water utility based on
market conditions as of September 10tn
The Committee agreed that an ordinance approving the refunding transaction should
be presented at the regular City Council Meeting on October 7, 2008.
Discussion of Tax Increment Methodologies.
Ben summarized the process to validate his understanding of the tax incre ent
methods for the DDA and URA. Chuck reviewed flow charts fltustrajWooff overall
process of the Tax Assessor for valuing all parcels in the C the process for
the Allocation of a portion of that value to Tax In Funding Entities.
Delivery of CAFR and Audit Report vernance from BONDI
Julia Stone, partner from Bo Co., LLC, stated that Bondi's opinion for the
City's financial state was `unqualified' which is the best an organization can
receive. Addi ' y, there were no findings related to the City's expenditure of
Federal rs. The auditors didn't post any audit adjustments to the financial
st ents this year.
ATTACHMENT
WATER BOARD MINUTES (Excerpt of Draft/Unapproved Minutes)
September 25, 2008
2009 Budget Agenda Item
Presenter: Terri Bryant, Utilities Finance and Budget Manager
Recommendation for Motion:
Vice Chairperson Gina Janett moves to approve the wastewater reimbursement r olution
for Mulberry Reclamation Facility improvement bonds. Board Member Phil P Ian
seconded the motion.
Discussion on the Motion:
Board member comments:
• It makes sense to order equipment (identified as needed for e project)before
actually needed due to costs of materials and equipment o the increase. This is
an opportunity save a significant amount of money.
• Money is currently being spent from reserves. This w Id allow Utilities to go
through debt service to obtain funds and reimburse a reserves.
• Some Board members would like to see more em asis on debt reduction and
questions 10 percent of our budget being spent, debt service.
• There appears to be millions of dollars in res ' es for the water fund. Why is that
not the case for the wastewater and storm ter funds?
Staff response: A good share of the wate udget reserve is "cash in lieu of."A
special fund paid by Development in icipation of building a reservoir(referring
to Halligan Reservoir.) Staff also di much better job of projections on the water
side.
Staff comments:
Ms. Bryant noted the advantage to ding debt when conditions are most favorable and
maintaining tax exempt status w selling the debt. Utilities Executive Director Brian
Janonis added we are in the pr ess of spending money, regardless of this reimbursement
clause. For example, demoli n is already taking place. This would provide a way to be
reimbursed for it. Mr. Jan s stated hiring an asset manager will move us in the right
direction and provide th pportunity to project expenses for the next 40-50 years and
plan for level rate incr ' ses.
Deputy City Atto y Carrie Daggett noted the reason for taking this resolution before
Council. Treas regulations are very strict about proceeds of bonds and what they can
be used for. s resolution follows the process set out for this exact type of scenario by
the regulati s, for example spending money in anticipation of issuing bonds. This
resolutio ill have no effect if the bonds are not issued, but if they are issued,the
resoluf allows proceeds from the bonds to be used to reimburse these expenses.
A rates from wastewater funds are about$14 million. If we doubled our rates to
d repairs to a broken water treatment plant, it would take approximately 2.5 years,
ssuming no cost increases, to raise enough cash to fund a wastewater plant.
I
Vote on the Motion: Following discussion on the motion, a vote was taken, and it passed
with one abstention by Board Member Connor(7 for, 1 abstention, 0 against.)
Recommendation for Motion:
Vice Chairperson Janett moved to approve refunding of all of Water's outstanding
revenue refunding bonds and improvement bonds, series 1998 to create cash flow savings
estimated at $1.2 million. Board Member John Bartholow seconded the motion.
Discussion on the Motion:
There was no discussion on the motion.
Vote on the Motion: A vote was taken, and it passed with one abstention by Board
Member Connor(7 for, 1 abstention, 0 against.)
Recommendation for Motion:
Board Member David Pillard moved to approve the 2009 Water, W ater and
Stormwater recommended budgets. Board Member Steve Bal on seconded the
motion.
Discussion on the Motion:
Board Member Gary Wockner shared hi back in a special document sent to
members prior to the Board meetin
Vote on the Motion:
A vote was taken, an ' assed (6 for, 2 against.) Dissenting votes were recorded as
follows: 1) Boar mber Connor would like to see more movement toward a fiscally
conservative i ion of retiring debt over time and addressed in more detail in a budget
propos d 2) Board Member Wockner as stated in his document. The document is
att as part of the record.
Prepared by:
Robin Pierce, Executive Administrative Assistant
Fort Collins Utilities
2
ORDINANCE NO. 117, 2008
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING PROCEEDS FROM THE ISSUANCE OF CITY OF FORT COLLINS,
COLORADO, WATER UTILITY ENTERPRISE, WATER REVENUE REFUNDING BONDS,
SERIES 2008, IN THE MAXIMUM AGGREGATE PRINCIPAL AMOUNT OF $19,000,000
WHEREAS, upon passage on first and second reading of Ordinance No. 006 of the
Board of the City of Fort Collins, Colorado, Water Utility Enterprise (the "Bond Ordinance"),
the Enterprise intends to issue City of Fort Collins, Colorado, Water Utility Enterprise, Water
Revenue Refunding Bonds, Series 2008, in the Maximum Aggregate Principal Amount of
$19,000,000 (the "Bonds"); and
WHEREAS, the issuance of the Bonds and the appropriation of the Bond's proceeds are
necessary to complete the refunding of the City's Water Revenue Refunding Bonds, Series 2008;
and
WHEREAS, a portion of the Bonds proceeds, in the amount of $19,000,000, was not
included in the 2008 budget, and the appropriation of those proceeds is necessary to authorize
the payment to the refunded bond escrow agent and of bond issuance costs; and
WHEREAS, Section 19.3(b) of Article V of the City Charter provides that an enterprise
board of the City shall not exercise powers reserved to the Council by the City Charter or
otherwise (other than the power to issue revenue bonds and other obligations); and
WHEREAS, Article V, Section 9, of the Charter of the City of Fort Collins permits the
City Council to make supplemental appropriations by ordinance at any time during the fiscal
year, provided that the total amount of such supplemental appropriations, in conjunction with all
previous appropriations for that fiscal year, does not exceed the current estimate of actual and
anticipated revenues to be received during the fiscal year; and
WHEREAS, City staff has determined that the appropriation of the previously
unappropriated proceeds of the Bonds in the amount of $19,000,000 will not cause the total
amount appropriated in the relevant funds to exceed the current estimate of actual and
anticipated revenues to be received during the fiscal year.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS that the previously unappropriated proceeds of the Bonds in the amount of
NINETEEN MILLION DOLLARS ($19,000,000) are hereby appropriated in the Water Fund for
payment to the refunded bond escrow agent and bond issuance costs contingent upon the final
adoption of the Bond Ordinance and the final sale and issuance of the Bonds by the Enterprise.
Introduced, considered favorably on first reading, and ordered published this 7th day of
October, A.D. 2008, and to be presented for final passage on the 21 st day of October, A.D. 2008.
Mayor
ATTEST:
City Clerk
Passed and adopted on final reading on the 21st day of October, A.D. 2008.
Mayor
ATTEST:
City Clerk