The City’s focus on resiliency and innovative constraint has enabled us to maintain our financial strength and continue providing the high quality services that are important to our residents – even during challenging swings in the economy. To accomplish this, the City of Sugar Land prepares a five year capital improvement program (CIP) annually as part of the budget process, incorporating the first year of the plan into the adopted budget for appropriation.  As such, our approach in the proposed FY19 budget continues this focus – particularly in public safety, infrastructure and the modernization of important accountability tools.

In order to maximize the City's ability to invest in such improvements - and to ensure residents today will not be solely responsible for  funding improvements that will benefit future residents, the fiscal year 2018 and 2019 CIP includes projects anticipated to be funded from the issuance of Certificates of Obligation (COs). These certificates are tax-backed debt supported by property taxes, and the City currently has a AAA bond rating - which means we are able to complete more projects at a lower cost to residents. Capital Projects for FY18 and FY19 focused on strengthened resilience (drainage), innovative constraint (public safety and facilities) and mobility improvements.  The complete list of projects for funding is included as an attachment for reference.

The amounts included in this resolution are from the budgeted amount for each project, as approved in the FY18 and FY19 budget and CIP. FY18 and FY19 capital projects (in $ millions) funded from proceeds of the CO’s are as follows:

The City Council approved Resolution  No. 18-03 on February 6, 2018 stating the City's intent to reimburse from future bond proceeds for projects budgeted in the FY18 capital improvement program.  This allows the City to combine the 2018 and 2019 projects into a single CO issue for increased efficiency and minimized issuance costs.

The issuance of COs must follow a series of resolutions and public notices under Texas law. State law requires adoption of a resolution authorizing publication of a notice stating the City’s intent to issue the certificates of obligation. The notice must be published once a week, for two consecutive weeks in a newspaper of general circulation in the City, with the date of the first publication at least thirty-one (31) days before the date tentatively set in said notice for the passage of the ordinance authorizing the issuance of such Certificates of Obligation.

The notice is planned for publication on October 24th and 31st, which meets the 31-day notice requirement for the planned December 4th sale date. Resolution No. 18-36 authorizes publication of a notice of intention to issue Certificates of Obligation in a maximum amount of $23 million, including deposits to construction and issuance costs.

This resolution is the beginning of the process to issue the Certificates of Obligation.  Once the City Council approves the resolution, the notice will be sent for publication in the October 24th and 31st newspapers to meet state statute requirements.  Rating agency visits will be scheduled for early November, with a sale date of December 4, 2018.

At a special meeting of the City Council Finance/Audit Committee on October 9th, staff reviewed the proposed bond issues, timeline of events and the Resolution of intent to issue Certificates of Obligation. As part of the bond issuance process, the City is evaluating a refunding issue which will refund portions of four currently outstanding bond issues, resulting in future debt service savings.  The City's financial advisors will monitor the market and report back to the City as the sale date approaches.  Over the next few weeks, the Council Finance/Audit Committee will be briefed on the process and if conditions change, as well as an overview of the refunding opportunity and process.

Staff recommends approval of Resolution No. 18-36 stating the City's intent to issue Certificates of Obligation on December 4, 2018, and authorizing publication of a notice in the City's official newspaper. Approval will further the City's position as a strong steward of public dollars through reinvestment into facilities and infrastructure, and - upon approval - the bond issues will be structured with an aggressive repayment schedule that will minimize costs to taxpayers and distribute the burden throughout the useful lives of the improvements.