HomeMy WebLinkAboutItem 02 - General Obligation Refunding BondsOrdinance authorizing the sale of general obligation refunding bonds, Series 2006
Market conditions, however, are fluctuating rapidly and we may need to actually perfect this
sale at a later date. In order to take advantage of optimum conditions, this bond sale
ordinance includes conditions for sale parameters that authorize the City Manager to
execute sale documents if the parameters are met any time between now and December
31, 2006, at which time the authorization expires.
The parameters for sale conditions are:
• Result in a reduction of debt service cost on a net present value basis of not less than
4% of the refunded obligations (estimated at $334,000).
• Not require refunding of any maturity of any series that would not produce an
incremental reduction in debt service cost on a present value basis.
The City's financial advisors further recommend that the revenue bonds being refunded
be refinanced with General Obligation Refunding Bonds. These bonds should get a better
rate than the revenue bonds and; since, they are GO's, will reduce our revenue bond
coverage test requirements and result in a total savings of approximately $1,386,000. First
Southwest further recommends that the refinancing bonds be sold at a negotiated sale.
This process is somewhat different than we have followed in the past for refinancing, but
due to current market conditions, staff recommends that this ordinance be approved in
order to get the optimum financial advantage of the refunding.
A summary of the official statement is included in your packet. The complete official
statement along with the draft sale ordinance is available in the City Secretary's office.
WAG/sit
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Fred- Werner -Grapevine refunding---- memo.pdf- ----- Page 1
First Southwest Company
.�1 Investment Bankers Since 1946
777 Main Street
Suite 1200
Fort Worth, TX 76102
817.332.9710 Direct
877.999.3792 Toll Free
817.336.5572 Fax
Date: October 9, 2006
To: Fred Werner
Cc: Bill Gaither
Subject: Proposed Bond Refinancing
Laura B. Alexander
Senior Vice President
lalexander@firstsw.com
First Southwest has been monitoring refinancing portions of the city's water and sewer debt
since last spring. Rates have come down significantly over the past several weeks which
presents the city with an opportune time to refinance selected maturities. While the actual
maturities refunded will depend on market conditions at the time of pricing, the issues that we
are recommending as refunding candidates are summarized below:
Refunding Candidates Maturi ties Interest Rates Amount
Waterworks and Sewer System 2008-2016 5.15% - 5.50% $ 1,710,000
Revenue Bonds, Series 1996
Waterworks and Sewer System
Revenue Refunding and Improvement
Bonds, Series 1997
Waterworks and Sewer System
Revenue Bonds, Series 1999
2010-2017 4.85% - 5.125% $ 4,105,000
2017-2019 5.00% $ 1,640,000
While the refunding candidates are water and sewer bonds, we are recommending that the city
sell GO refunding bonds. Since the city has experience with various tax backed debt that is
supported from other revenue sources, we believe that selling GO refunding bonds would not
have an adverse financial impact on the city. In fact, GO refunding bonds sell are slightly lower
rates than the city's water and sewer bonds which slightly enhances the savings associated with
the refunding. In addition, a GO refunding would release some funds from the water and sewer
system bond reserve fund which can be applied to the escrow cost of the refunded bonds
thereby increasing the annual savings associated with the new refunding bonds.
In proceeding with the refunding, we recommend that the city sell the bonds through a
negotiated sale. This transaction is better suited for a negotiated sale due to the complexities of
the advance refunding. We are also recommending that the city council delegate the actual
pricing of the bonds to the City Manager. The way this would work is for the council to adopt a
resolution which would authorize the City Manager to award the refunding bonds to the
underwriters provided the savings generated by the refunding met the a predetermined present
value savings threshold and certain other parameters regarding structure and interest rates.
Once the council has adopted the resolution, no additional action would be required by the
Fred Werner - Grapevine refunding memo.pdf
Page
council to effect the bond sales. The delegation of the pricing authority would expire in
approximately three months. If the savings threshold is not met prior to that time, further council
action would be required to complete the refunding. Delegating the pricing will provide the
underwriters with the flexibility to achieve the best pricing for the city because they will not be
limited to selling on a council meeting day. While the city has not used this delegation authority
in the past, it is not an uncommon practice.
David and I would be please to answer any questions that you may have.
60 Years of
Building Trusted Financial Relationships
This communication i s for information only, not an offer, solicitation or recommendation, nor an officialconfi nation of any finandaltransaction. It is not
to be considered research. The informationis considered to be reliable,but First Southwest Company does not wamant its completeness or accuracy,
prices and availabilityare subject to change without notice. Vk may trade, have long or short positions, or act as a market maker in any financial
instrumentdiscussed herein. Clients should consult theirown advisors regarding any accounting, Iegalor tax aspects. Investors are instructed to read
the entireOffici at Statement to obtaininformationessential to the making of an informed investment decision.
2
PRELIMINARY OFFICIAL, STATIa1ENT
Dated November _, 2006
NEW ISSUE - Book -Entry -Only
Ratings:
Moody's: Applied For
S&P: Applied For
(see "Other Information —
Ratings" herein)
In the opinion of Bond Counsel, interest on the Bonds is excludable from gross income for federal income tax purposes under existing law and the Bonds
are not private activity bonds. See "Tax Matters - Tax Exemption" herein for a discussion of the opinion of Bond Counsel, including a description of
alternative minimum tax consequences for corporations.
THE BONDS WILL NOT BE DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS" FOR FINANCIAL INSTITUTIONS
$7,020,000* .
CITY OF GRAPEVINE, TEXAS
(Tarrant County)
GENERAL OBLIGATION REFUNDING BONDS, SERIES 2006
Dated Date: November 15, 2006 Due: August 15, as shown below
PAYMENT TERMS ... Interest on the $7,020,000* City of Grapevine, Texas General Obligation Refunding Bonds, Series 2006 (the "Bonds") will accrue
from November 15, 2006 (the "Dated Date"), will be payable February 15 and August 15 of each year, commencing February 15, 2007, and will be
calculated on the basis of a 360 -day year consisting of twelve 30 -day months. The definitive Bonds will be initially registered and delivered only to Cede
& Co., the nominee of The Depository Trust Company ("DTC") pursuant to the Book -Entry -Only System described herein. Beneficial ownership of the
Bonds may be acquired in denominations of $5,000 or integral multiples thereof. No physical delivery of the Bonds will be made to the owners
thereoL Principal of, premium, if any, and interest on the Bonds will be payable by the Paying Agent/Registrar to Cede & Co., which will make
distribution of the amounts so paid to the participating members of DTC for subsequent payment to the beneficial owners of the Bonds. See "The Bonds -
Book -Entry -Only System" herein. The initial Paying Agent/Registrar is The Bank of New York Trust Company, National Association, Dallas, Texas (see
"The Bonds - Paying Agent/Registrar").
AUTHORITY FOR ISSUANCE ... The Bonds are issued pursuant to the Constitution and general laws of the State of Texas (the "State"), including
particularly Texas Government Code, Chapter 1207, as amended, and are direct obligations of the City of Grapevine, Texas (the "City"), payable from a
direct and continuing ad valorem tax levied on all taxable property within the City, within the limits prescribed by law, as provided in the ordinance
authorizing the Bonds (the "Ordinance") (see "The Bonds - Authority for Issuance").
PURPOSE ... Proceeds from the sale of the Bonds, together with other available City funds, will be used to refund a portion of the City's outstanding debt
described in Schedule I attached to this Oficial Statement (the "Refunded Obligations") to lower the overall debt service requirements of such debt and to
pay the costs associated with the issuance of the Bonds.
Amount
Maturity Rate
$ 175,000
2007
140,000
2008
150,000
2009
570,000
2010
600,000
2011
620,000
2012
655,000
2013
MATURITY SCHEDULE*
CUSIP
Yield suffix",
Amount
Maturity
$ 685,000
2014
710,000
2015
740,000
2016
1,055,000
2017
450,000
2018
470,000
2019
(Accrued Interest from November 15, 2006 to be added)
CUSIP Prefix: 388622 (o
CUSIP
Rate Yield Suffix",
(1) CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by Standard and Poor's CUSIP Service Bureau,
A Division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the
CUSIP Services.
OPTIONAL REDEMPTION ... The City reserves the right, at its option, to redeem Bonds having stated maturities on and after August 15, 2015, in whole or
in part in principal amounts of $5,000 or any integral multiple thereof, on August 15, 2014, or any date thereafter, at the par value thereof plus accrued
interest to the date of redemption (see "The Bonds - Optional Redemption").
LEGALITY ... The Bonds are offered for delivery when, as and if issued and received by the Underwriter and subject to the approving opinion of the
Attorney General of Texas and the opinion of Vinson & Elkins L.L.P., Bond Counsel, Dallas, Texas (see Appendix C, "Form of Bond Counsel's
Opinion"). Certain legal matters will be passed upon for the Underwriter by Kelly Hart and Hallman LLP, Fort Worth, Texas, Counsel for the
Underwriter.
DELIVERY ... It is expected that the Bonds will be available for delivery through The Depository Trust Company on December 20, 2006
* Preliminary, subject to change.
SOUTHWEST SECURITIES
For purposes of compliance with Rule 12c2-12 of the Securities and Exchange Commission as amended in effect on the date hereof, this document
constitutes an Oficial Statement of the City with respect to the Bonds that has been 'deemed final" by the City as of its date except for the omission of no
more than the information permitted by Rule 12c2-12.
This Official Statement, which includes the cover page and the Appendices hereto, does not constitute an offer to sell or the solicitation of an gJfer to buy
in any jurisdiction to any person to whom it it unlawful to make such offer, solicitation or sale.
No dealer, broker, salesperson or other person has been authorized to give information or to make any representation other than those contained in this
Official Statement, and, ifgiven or made, such other information or representations must not be relied upon.
Certain information set forth herein has been provided by sources other than the City that the City believes is reliable, but the City makes no
representation as to the accuracy ofsuch information. Any information and expressions of opinion herein contained are subject to change without notice,
and neither the delivery of the Official Statement nor any .cafe made hereunder .shall, under any circumstances, create any implication that there has been
no change in the affairs of the City or other matters described herein since the date hereof. See "Continuing Disclosure of Information"for a description
of the City's undertaking to provide certain information on a continuing basis.
THE BONDS ARE EXEMPT FROM REGISTRATION WITH THE SECURITIES AND EXCHANGE COMMISSION AND CONSEQUENTLY HA VE NOT
BEEN REGISTERED THEREWITH. THE REGISTRATION, QUALIFICATION, OR EXEMPTION OF THE BONDS IN ACCORDANCE WITH
APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTION IN WHICH THESE SECURITIES HAVE BEEN REGISTERED OR
EXEMPTED SHOULD NOT BE REGARDED ASA RECOMMENDATION THEREOF.
NEITHER THE CITY NOR THE UNDERWRITER MAKES ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THE INFORMATION
CONTAINED IN THIS PRELIMINARY OFFICIAL STATEMENT REGARDING THE DEPOSITORY TRUST COMPANY OR ITS BOOK -ENTRY -ONLY
SYSTEM, AS SUCH INFORMATION HAS BEEN FURNISHED BY THE DEPOSITORY TRUST COMPANY,
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVER -ALLOT OR EFFECT TRANSACTIONS THAT
STABILIZE OR MAINTAIN THE MARKET PRICES OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET SUCH STABILIZING, IF COMMENCED, MAYBE DISCONTINUED AT ANY TIME.
THIS OFFICIAL STATEMENT CONTAINS "FORWARD-LOOKING "STATEMENTS WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. SUCH STATEMENTS MAY INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER
FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE AND ACHIEVEMENTS TO BE DIFFERENT FROM FUTURE RESULTS,
PERFORMANCE AND ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. INVESTORS ARE
CAUTIONED THAT THE ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD-LOOKING
STATEMENT.
The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this
Oficial Statement in accordance with, and as part of ,its responsibility to investors under federal securities laws as applied to the facts and circumstances
ofthis transaction, but the Underwriter does not guarantee the accuracy or completeness ofsuch information.
TABLE OF CONTENTS
„= PRELIMINARY OFFICIAL STATEMENT SUMMARY .............. 3 TAX MATTERS. .............. .................. .............. .,................................. 28
TAXEXEMPTION......................................................................... 28
CITY OFFICIALS, STAFF, AND CONSULTANTS ............... -...... 5 ADDITIONAL FEDERAL INCOME TAX CONSIDERATIONS............. 28
ELECTED OFFICIALS..................................................................... 5
SELECTED ADMINISTRATIVE STAFF ............... -- ................... ......, 5 CONTINUING DISCLOSURE OF INFORMATION ............. .......30
CONSULTANTS AND ADVISORS .................................................... 5
OTHER INFORMATION..................................................................31
INTRODUCTION.........—.....................................................................7 RATINGS ................... ................. ............................ ..................... 31
PLAN OF FINANCING ............................ .... ............ — ............ ............ 7
THEBONDS......................................................................................... 8
TAXINFORMATION....................................................................— 13
TABLE -1 - VALUATION, EXEMPTIONS AND GENERAL OBLIGATION
DEBT............................................................................... 16
TABLE 2 - TAXABLE ASSESSED VALUATIONS BY CATEGORY.... 17
TABLE 3 - VALUATION AND GENERAL OBLIGATION DEBT
HISTORY................................................. -- .................... 18
TABLE 4 - TAX RATE, LEVY AND COLLECTION HISTORY .......... 18
TABLE 5 - TEN LARGEST TAXPAYERS ........................................ 18
TABLE 6 - TAX ADEQUACY .......... .--........................................ 19
TABLE 7 - ESTIMATED OVERLAPPING DEBT ............................... 19
DEBT INFORMATION.....................................................................
20
TABLE 8 - GENERAL OBLIGATION DEBT SERVICE
REQUIREMENTS..............................................................
20
TABLE 9 - INTEREST AND SINKING FUND BUDGET PROJECTION 21
TABLE 10 - COMPUTATION OF SELF-SUPPORTNG DEBT ............
21
TABLE 1 I - AUTHORIZED BUT UNISSUED GENERAL OBLIGATION
BONDS............................................................................
22
TABLE 12 - OTHER OBLIGATIONS ..............................................
22
FINANCIAL INFORMATION ..................... -- ...... .................. .......
23
TABLE 13 — CHANGES IN NET ASSETS .......................................
23
TABLE 13A - GENERAL FUND REVENUES AND EXPENDITURE
UNDERWRITING..........................................................................33
HISTORY.........................................................................
24
TABLE 14 - MUNICIPAL SALES TAX HISTORY .........................—
25
TABLE 15 - CURRENT INVESTMENTS ..........................................
27
LITIGATION.................................................................................
31
REGISTRATION AND QUALIFICATION OF BONDS FOR SALE ........31
LEGAL INVESTMENTS AND ELIGIBILITY TO SECURE PUBLIC
FUNDS IN TEXAS.............................................................
31
LEGAL MATTERS........................................................................
31
AUTHENTICITY OF FINANCIAL DATA AND OTHER INFORMATION32
FINANCIAL ADVISOR................................................................
- 32
FORWARD-LOOKNG STATEMENTS DISCLAIMER ........................32
VERIFICATION OF ARITHMETICAL AND MATHEMATICAL
COMPUTATIONS..............................................................
32
UNDERWRITING..........................................................................33
APPROVAL OF OFFICIAL STATEMENT .........................................
33
SCHEDULE OF REFUNDED OBLIGATIONS .................Schedule I
APPENDICES
GENERAL INFORMATION REGARDING THE CITY ........................ A
EXCERPTS FROM THE ANNUAL FINANCIAL REPORT .................. B
FORM OF BOND COUNSEL'S OPINION ......................................... C
The cover page hereof, this page, the appendices included herein and
any addenda, supplement or amendment hereto, are part of the Official
Statement.
PRELIMINARY OFFICIAL STATEMENT SUMMARY
This summary is subject in all respects to the more complete information and definitions contained or incorporated in this
Official Statement. The offering of the Bonds to potential investors is made only by means of this entire Official Statement. No
person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official
Statement.
THE CITY .....................................
The City of Grapevine, Texas (the "City') is a political subdivision and municipal corporation
of the State, located in Tarrant County, Texas. The City covers approximately 35.8 square
miles (see "Introduction - Description of City").
THE BONDS ..................................
The $7,020,000* General Obligation Refunding Bonds, Series 2006 are to mature on August
15 in the years 2007 through 2019 (see "The Bonds - Description of the Bonds").
PAYMENT OF INTEREST ..............
Interest on the Bonds accrues from November 15, 2006, and is payable February 15, 2007,
and each August 15 and February 15 thereafter until maturity or prior redemption (see "The
Bonds - Description of the Bonds").
AUTHORITY FOR ISSUANCE..........
The Bonds are issued pursuant to the Constitution and general laws of the State, including
particularly Chapter 1207, Texas Government Code, as amended, and the Ordinance passed
by the City Council of the City (see "The Bonds - Authority for Issuance").
SECURITY FOR THE BONDS ..........
The Bonds constitute direct obligations of the City, payable from a direct and continuing ad
valorem tax levied, within the limit prescribed by law, on all taxable property located within
the City (see "The Bonds - Security and Source of Payment").
REDEMPTION ...............................
The City reserves the right, at its option, to redeem Bonds having stated maturities on and
after August 15, 2015, in whole or in part in principal amounts of $5,000 or any integral
multiple thereof, on August 15, 2014, or any date thereafter, at the par value thereof plus
accrued interest to the date of redemption (see "The Bonds - Optional Redemption").
TAX EXEMPTION ............................
In the opinion of Bond Counsel, the interest on the Bonds will be excludable from gross income
for federal income tax purposes under existing law and the Bonds are not private activity bonds.
See "Tax Matters - Tax Exemption" for a discussion of the opinion of Bond Counsel, including a
description of the alternative minimum tax consequences for corporations.
USE OF PROCEEDS ........................
Proceeds from the sale of the Bonds, together with other available City funds, will be used to
refund a portion of the City's outstanding debt described in Schedule I attached to this Official
Statement (the "Refunded Obligations") to lower the overall debt service requirements of such
debt and to pay the costs associated with the issuance of the Bonds.
RATINGS ......................................
The presently outstanding tax supported debt of the City is rated "A1" by Moody's Investors
Service, Inc. ("Moody's") and "AA-" by Standard & Poor's Ratings Services, A Division of
The McGraw-Hill Companies, Inc. ("S&P"). The City also has issues outstanding which are
rated "Aaa" by Moody's and "AAA" by S&P through insurance by various commercial
insurance companies. Applications for contract ratings on the Bonds have been made to
Moody's and S&P (see "Other Information - Ratings").
Boox-ENTRY-ONLY SYSTEM......
The definitive Bonds will be initially registered and delivered only to Cede & Co., the
nominee of DTC pursuant to the Book -Entry -Only System described herein. Beneficial
ownership of the Bonds may be acquired in denominations of $5,000 or integral multiples
thereof. No physical delivery of the Bonds will be made to the beneficial owners thereof.
Principal of, premium, if any, and interest on the Bonds will be payable by the Paying
Agent/Registrar to Cede & Co., which will make distribution of the amounts so paid to the
participating members of DTC for subsequent payment to the beneficial owners of the Bonds
(see "The Bonds - Book -Entry -Only System").
PAYMENT RECORD .....................
The City has not defaulted in payment of its tax -supported debt since 1932 when all defaults
were corrected without refunding.
* Preliminary, subject to change.
'
SELECTED FINANCIAL INFORMATION
Ratio Funded
Fiscal
Per Capita
Per Capita
Tax Debt to
Year
Estimated
Taxable
Taxable
Funded
Funded
Taxable
%of
Ended
City
Assessed
Assessed
Tax
Tax
Assessed
Total Tax
9130
Population (1)
Valuation (Z)
Valuation
Debt
Debt
Valuation
Collections
2003
46,400
$ 4,766,361,580
$ 102,723
$ 157,645,000
$ 3,398
3.31%
99.40%
2004
46,684
4,880,107,595
104,535
148,300,000
3,177
3.04%
99.70%
2005
47,036
5,227,295,000
111,134
144,685,000
3,076
2.77%
98.90%
2006
47,500
5,427,160,086
114,256
147,615,000
3,108
2.72%
99.19% 14)
2007
47,599
5,444,409,754
114,381
144,410,000 (3)
3,034
2.65%
N/A
(1) Source: The City of Grapevine.
(2) Source: Tarrant Appraisal District.
(3) Projected, includes the Bonds. Preliminary, subject to change.
(4) Tax collections are not audited. Preliminary information provided by City staff.
For additional information regarding the City, please contact:
Fred Werner
Director of Finance
City of Grapevine
200 South Main
Grapevine, Texas 76051
(817)410-3111
4
David K. Medanich
Laura Alexander
First Southwest Company
777 Main Street, Suite 1200
Fort Worth, Texas 76102
(817)332-9710
CITY OFFICIALS, STAFF, AND CONSULTANTS
ELECTED OFFICIALS
Councilmember, Place b
(1) Previously served 14 years as Mayor and Councilmember.
SELECTED ADMINISTRATIVE STAFF
Name Position
Bruno Rumbelow
Length of
Term
Administrative Services Director
City Council
Service
Expires
Occupation
William D. Tate
18 Years (1)
M ay, 2009
Attorney -at -Law
M ay or
Ted R. Ware
27 Years
M ay, 2008
Commercial Contractor
M ay or Pro Tem
C. Shane Wilbanks
21 Years
M ay, 2009
Personnel Director
Councilmember, Place I
Sharron Spencer
21 Years
M ay, 2009
Retired Sales Representative
Councilmember, Place 2
Clydene Johnson
I I Years
M ay, 2007
Independent Insurance Agent
Councilmember, Place 3
Darlene Freed
8 Years
M ay, 2007
Commercial Real Estate Agent
Councilmember, Place 4
Roy Stewart
10 Years
M ay, 2008
Construction Company Owner
Councilmember, Place b
(1) Previously served 14 years as Mayor and Councilmember.
SELECTED ADMINISTRATIVE STAFF
Name Position
Bruno Rumbelow
City Manager
Bill Gaither
Administrative Services Director
Fred Werner
Director of Finance
Linda Huff
City Secretary
Length of Service
8 Years���
10 Years
9 Years
19 Years (2)
(1) 8 years with City; 1 year in present position.
(2) 24 years with City; 19 years in present position.
CONSULTANTS AND ADVISORS
Auditors.........................................................................................................................................................Deloitte & Touche LLP
Fort Worth, Texas
BondCounsel................................................................................................................................................ Vinson & Elkins L.L.P.
Dallas, Texas
FinancialAdvisor...................................................................................................................................... First Southwest Company
Fort Worth, Texas
5