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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 07/19/2016 - SECOND READING OF ORDINANCE NO. 082, 2016, APPROPRAgenda Item 15 Item # 15 Page 1 AGENDA ITEM SUMMARY July 19, 2016 City Council STAFF John Voss, Controller/Assistant Financial Officer Mike Beckstead, Chief Financial Officer SUBJECT Second Reading of Ordinance No. 082, 2016, Appropriating Proceeds from the Issuance of City of Fort Collins, Colorado, Wastewater Utility Enterprise, Sewer Revenue Refunding Bonds, Series 2016A, in the Maximum Aggregate Principal Amount of $21,900,000 in the Wastewater Utility Fund. EXECUTIVE SUMMARY This Ordinance, adopted on First Reading on July 5, 2016 by a vote of 6-0 (Horak recused) appropriates the proceeds from the Revenue Refunding Bond, series 2016A, for the purpose of refinancing the callable portion of the 2009A Revenue Bonds. Proceeds will be used to pay off callable bonds as well as pay for cost of issuance fees. The proceeds from the original 2009A bonds of $30.7 million were used to make improvements to the Mulberry Water Reclamation Facility. Savings are anticipated to be $2.4 million. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. First Reading Agenda Item Summary, July 5, 2016 (w/o attachments) (PDF) 2. Ordinance No. 082, 2016 (PDF) Agenda Item 3 Item # 3 Page 1 AGENDA ITEM SUMMARY July 5, 2016 City Council STAFF John Voss, Controller/Assistant Financial Officer SUBJECT First Reading of Ordinance No. 082, 2016, Appropriating Proceeds from the Issuance of City of Fort Collins, Colorado, Wastewater Utility Enterprise, Sewer Revenue Refunding Bonds, Series 2016A, in the Maximum Aggregate Principal Amount of $21,900,000 in the Wastewater Utility Fund. EXECUTIVE SUMMARY The purpose of this item is to appropriate the proceeds from the Revenue Refunding Bond, series 2016A, for the purpose of refinancing the callable portion of the 2009A Revenue Bonds. Proceeds will be used to pay off callable bonds as well as pay for cost of issuance fees. The proceeds from the original 2009A bonds of $30.7 million were used to make improvements to the Mulberry Water Reclamation Facility. Savings are anticipated to be $2.4 million. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION After passage of the TABOR Amendment by the Colorado voters in 1992, the City’s voters approved an amendment to the City Charter that authorized the City Council to establish the City’s Wastewater Utility Enterprise (“Enterprise”), as well as enterprises for the City’s other utilities. In 1993, the City Council adopted an ordinance establishing the Enterprise. The Charter amendment authorizes the Enterprise to issue its own revenue bonds on behalf of the City. In doing so, the Enterprise is exempt from the voter-approved requirements of the TABOR Amendment with respect to the issuance of bonds. 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 Wastewater Utility. Authorizing the issuance of the bonds and appropriating the proceeds are both necessary to complete the bond transaction. In Proprietary Funds such as the Wastewater Enterprise Fund, the accounting treatment will record this transaction almost all on the balance sheet. The exception is for cost of issuance fees, which will be recorded in the income statement as expenses. Types of issuance costs include Financial Advisor services, Bond Counsel services, rating agency, escrow trustee, bond bidding, and others. CITY FINANCIAL IMPACTS Bond proceeds of $21.9 million will be used to pay the cost of issuance fees and defease the callable portion of the 2009A Wastewater Revenue Bonds. Savings are anticipated to be $2.4 million with a net present value savings of $2.1 million. The cost of issuance is included in the net savings calculations. ATTACHMENT 1 Agenda Item 3 Item # 3 Page 2 $ 000s Date Old Debt Service New Debt Service Savings Present Value Savings 12/1/2016 $ 1,707 $ 1,663 $ 44 $ 42 12/1/2017 2,422 2,270 153 150 12/1/2018 2,425 2,272 153 147 12/1/2019 2,450 2,242 208 195 12/1/2020 2,467 2,256 210 194 12/1/2021 2,486 2,279 207 186 12/1/2022 2,507 2,298 209 184 12/1/2023 2,534 2,324 210 182 12/1/2024 2,557 2,346 211 179 12/1/2025 2,585 2,379 206 171 12/1/2026 2,612 2,403 208 170 12/1/2027 2,623 2,413 211 168 12/1/2028 2,644 2,434 210 164 32,018 29,580 2,438 2,133 BOARD / COMMISSION RECOMMENDATION At its June 1, 2016 meeting, the Council Finance Committee recommended adoption of the Ordinance to refinance the 2009 Wastewater Revenue Bonds. At its June 16, 2016 meeting, the Water Board recommended adoption of an ordinance to allow for the pre- refunding of the 2009 Wastewater Revenue Bond. ATTACHMENTS 1. Council Finance Committee minutes, June 1, 2016 (PDF) 2. Water Board minutes, June 16, 2016 (draft) (PDF) -1- ORDINANCE NO. 082, 2016 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROPRIATING PROCEEDS FROM THE ISSUANCE OF CITY OF FORT COLLINS, COLORADO, WASTEWATER UTILITY ENTERPRISE, SEWER REVENUE REFUNDING BONDS, SERIES 2016A, IN THE MAXIMUM AGGREGATE PRINCIPAL AMOUNT OF $21,900,000 IN THE WASTEWATER UTILITY FUND WHEREAS, upon passage on first and second reading of Ordinance No. 006 of the Board of the City of Fort Collins, Colorado, Wastewater Utility Enterprise (the “Board Ordinance”), the Enterprise intends to issue City of Fort Collins, Colorado, Wastewater Utility Enterprise, Sewer Revenue Refunding Bonds, Series 2016A, to be issued during 2016, in the Maximum Aggregate Principal Amount of $21,900,000 (the “Bonds”); and WHEREAS, the issuance of the Bonds, and the appropriation of the proceeds thereof, is necessary to complete the refunding of the City’s Sewer Revenue Refunding Bonds, Series 2016A; and WHEREAS, proceeds from the Bonds of $21,900,000 were not included in the 2016 budget, and the appropriation of these proceeds is necessary for 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 City Charter authorizes 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 combination 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 $21,900,000 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; and WHEREAS, the City Council hereby determines that the adoption of this Ordinance is necessary for the public’s health, safety and welfare and finds that it is in the best interests of the City and its Wastewater Utility. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. -2- Section 2. That the previously unappropriated proceeds of the Bonds in the amount of TWENTY ONE MILLION NINE HUNDRED THOUSAND DOLLARS ($21,900,000) are hereby appropriated in the Wastewater 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 5th day of July, A.D. 2016, and to be presented for final passage on the 19th day of July, A.D. 2016. __________________________________ Mayor ATTEST: _______________________________ City Clerk Passed and adopted on final reading on the 19th day of July, A.D. 2016. __________________________________ Mayor ATTEST: _______________________________ City Clerk