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City Council Agenda Request
December 5, 2023
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AGENDA REQUEST NO: IV.D.
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| | AGENDA OF: City Council Meeting |
| | INITIATED BY: Jennifer Brown, Director of Special Projects |
| | PRESENTED BY: Jennifer Brown, Director of Special Projects |
| | RESPONSIBLE DEPARTMENT: Finance |
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| | | | | | | | | AGENDA CAPTION: | | Consideration of and action on CITY OF SUGAR LAND RESOLUTION NO. 23-40: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SUGAR LAND, TEXAS, EXPRESSING INTENT TO FINANCE EXPENDITURES TO BE INCURRED. |
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| | | | | | | | | RECOMMENDED ACTION: | | Approval of Resolution No. 23-40 stating the City's intent to reimburse certain expenditures from future tax-exempt bond proceeds. |
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| | | | | | | | | EXECUTIVE SUMMARY: | The City of Sugar Land is recognized for its financial stewardship across the state and nation. Our financial success and aggressive repayment schedules benefit residents by ensuring our dollars can go farther by borrowing funds at the lowest possible interest rates as we complete public infrastructure projects to protect the high-quality of life important to Sugar Land residents.
Bond financing is used only when needed capital projects cannot be funded prudently from current revenues or fund balances. This method of financing helps to ensure inter-generational equity by spreading payments for assets and infrastructure over their useful lives - similar to taking out a mortgage to purchase a home you intend to live in for a long time. This means that residents today are not responsible for paying for the full cost of a project that will continue to provide benefits decades in the future. Debt financing is never used to fund operating expenses.
The City's finances are set up so that projects are paid from the revenue streams that benefit from them- water utility projects are paid from water, wastewater and surface water revenues, airport projects are paid from airport revenues, and general capital projects are paid from property tax dollars as they benefit the entire city.
General Obligation Bond projects approved by voters in November 2019 have been phased in implementation due to the economic impacts of COVID-19. The FY24 projects are all from the Public Safety Facilities proposition. These projects are funded with an overall increase of $0.0035 in the 2023 tax rate that was approved by City Council in September 2023 as planned.
The FY2024 budget has capital projects that are planned to be funded from the issuance of tax-exempt debt. This debt will be issued with a 20-year maturity schedule, with at least 50% principal paid within the first 10 years- consistent with the Financial Management Policy Statements. Based on today’s interest rate environment, it may not be in the City’s best interest to issue the debt early, rather it may be better to wait to see if inflation slows and rates start to decline as a result.
Projects included in the FY2024 budget to be funded from bond proceeds are shown below by the funding source:
Utility Projects
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Project #
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Project Name
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Amount
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CWW2301
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Lift Station 48 (MUD 136 Reg. LS#1)
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6,448,000
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CWW2303
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Wastewater Treatment Plants Improvements
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1,500,000
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CWW2304
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Collection System Rehabilitation Program
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2,800,000
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CWW2401
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Lift Station Rehabilitation Program
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1,500,000
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CWW2402
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Lift Station SCADA Program
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200,000
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CWW2403
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Wastewater Forcemain Condition Assessment
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250,000
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CWW2404
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Lift Station Bypass Pumps Rehab
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550,000
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CSW2401
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SWTP Rehab Ph 1 - Chemical System Replacement/ Impr.
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964,000
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CWA2401
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Distribution System Water Main Rehabilitation Program
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300,000
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CWA2402
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Ground Storage Tank Rehabilitation
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1,200,000
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CWA2403
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SCADA Improvements
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380,000
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CWA2404
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Ground Water Plant Rehabilitation
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2,160,000
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CWA2405
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Well Rehabilitation
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870,000
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CWA2406
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GWP Emergency Generator - RAD Maintenance Program
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200,000
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CWA2407
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Capital Recovery Fee Study
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60,000
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CWA2408
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Elevated Storage Tank Rehabilitation
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200,000
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CWA2409
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Groundwater Plant Generator Replacement
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600,000
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Total - Revenue Bonds
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$ 20,182,000
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GO Bond Projects
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Project #
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Project Name
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Amount
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CMU2202
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Public Safety & Public Services Building Rehabilitation
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1,000,000
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CMU2301
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EOC/Public Safety Dispatch Building
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10,000,000
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Total - GO Bonds
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$11,000,000
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Certificates of Obligation
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Project #
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Project Name
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Amount
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CMU2204
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Public Safety Supplemental Funding
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$ 6,100,000
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CMU2401
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City Facilities Elevators
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500,000
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CST1901
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Soldiers Field Ext to SH6/Roundabout @ FC Blvd. & Brooks St Impr.
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1,100,000
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CST2203
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University Blvd. Widening- Mobility Bond Project (Intersection Impr.)
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900,000
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CST2401
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Country Club Blvd. Impr. from Sugar Creek to Chesterfield
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1,000,000
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CTR2402
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Next Gen ITS Detection
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2,300,000
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Total- Certificates of Obligation
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$ 11,900,000
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Some projects will be ready to move forward ahead of the planned bond sale, and IRS regulations allow this, if the City states its intent to reimburse these projects from the proceeds of future tax-exempt bond proceeds. The IRS allows for reimbursement of expenditures made up to 60 days prior to the date of the resolution and allows up to 18 months for the City to issue the bonds. This allows the City to time the bond issuance to best meet the cash flow needs of the projects, and time the bonds to the bond market.
Recommendation
The City’s bond counsel has prepared a Resolution with a maximum reimbursement of $41 million for all issues. Staff recommends approval of Resolution No. 23-40 stating the City's intent to reimburse expenditures from future tax-exempt bond proceeds. |
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| BUDGET |
| | EXPENDITURE REQUIRED: |
| | CURRENT BUDGET: |
| | ADDITIONAL FUNDING: |
| | FUNDING SOURCE: |
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