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HomeMy WebLinkAboutItem 10 - Certificates of Obligation MEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: BRUNO RUMBELOW, CITY MANAGER MEETING DATE: MARCH 3, 2026 SUBJECT: RESOLUTION AUTHORIZING PUBLICATION OF NOTICE OF INTENTION TO ISSUE CERTIFICATES OF OBLIGATION IN A PRINCIPAL AMOUNT NOT TO EXCEED $30,000,000; APPROVING THE PREPARATION OF A PRELIMINARY OFFICIAL STATEMENT AND A NOTICE OF SALE; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF; AND EXPRESSING INTENT TO REIMBURSE EXPENDITURES TO BE INCURRED RECOMMENDATION: City Council to consider a resolution providing notice of intent to issue City of Grapevine, Texas Certificates of Obligation and giving the City the option of reimbursing itself through a future debt issuance for various capital projects. FUNDING SOURCE: Funds will be available in the Utility Enterprise Fund upon approval of the resolution and receipt of funds from the sale of bonds. BACKGROUND: As part of the Capital Project planning efforts for the City of Grapevine, the following projects have been identified as requirements to maintain, improve, or repair City water and sewer infrastructure. The cost of these projects will be funded though the future issuance of bonds as total costs are determined. Projects include constructing, reconstructing, or replacing any of the City's water utility assets including the water plant, the sewer treatment plant, lift stations, pump stations, water towers, communication equipment, water lines, sewer lines, and their associate appurtenances including but not limited to, pumps, electrical services, water meters, valves, hydrants, sanitary sewer manholes, water services, and sanitary sewer services. The resolution is requesting $10,000,000 to be used for these projects prior to the issuance of the bonds with reimbursement expected upon receipt of funds from the sale of bonds in June 2026. Staff anticipates returning to Council on May 5, 2026, for approval of the ordinance and issuance of the obligation. Staff recommends approval. RESOLUTION NO. 2026-010 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GRAPEVINE, TEXAS, AUTHORIZING PUBLICATION OF NOTICE OF INTENTION TO ISSUE CERTIFICATES OF OBLIGATION; APPROVING THE PREPARATION OF A PRELIMINARY OFFICIAL STATEMENT AND A NOTICE OF SALE; EXPRESSING INTENT TO REIMBURSE EXPENDITURES TO BE INCURRED; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF WHEREAS, the City Council (the "City Council") of the City of Grapevine, Texas (the "City"), deems it advisable to issue certificates of obligation (the "Certificates") of the City in accordance with the notice hereinafter set forth; and WHEREAS, the City desires to approve the preparation of a preliminary official statement (the "Preliminary Official Statement") and the preparation of a notice of sale ("Notice of Sale"), if any, in anticipation of its issuance of the Certificates; and WHEREAS, the City Council has found and determined that a notice of intention to issue certificates of obligation should be published in accordance with the requirements of applicable law; and WHEREAS, the City will make, or has made not more than 60 days prior to the date hereof, payments with respect to the design, acquisition, construction, reconstruction or renovation of the projects listed on "Exhibit A" attached hereto (collectively, the "Financed Project"); and WHEREAS, the City has concluded that it does not currently desire to issue obligations to finance the costs associated with the Financed Project; and WHEREAS, the City desires to reimburse itself for the costs associated with the Financed Project from the proceeds of obligations to be issued subsequent to the date hereof; and WHEREAS, the City reasonably expects to issue obligations to reimburse itself for the costs associated with the Financed Project and, pursuant to Section 1.150-2 of the Treasury Regulations, hereby declares its intent to do so; and WHEREAS, it is hereby found and determined that the meeting at which this resolution is considered is open to the public as required by law, and public notice of the time, place and purpose of said meeting was given as required by Chapter 551, Texas Government Code. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF GRAPEVINE, TEXAS: Section 1. The findings, definitions and recitations set out in the preamble to this resolution are found to be true and correct and are hereby adopted by City Council and made a part hereof for all purposes. Section 2. The City Secretary is hereby authorized and directed to cause to be published in the manner required by law and in substantially the form attached hereto as "Exhibit A", a notice of the City's intention to issue the Certificates (the "Notice"). Section 3. The Notice shall be published once a week for two (2) consecutive weeks in a newspaper which is of general circulation in the City, the date of the first publication to be at least forty-six (46) days before the date tentatively set in the Notice for the passage of the ordinance authorizing the issuance of the Certificates. In addition, the Notice shall be posted continuously on the City's website for at least forty-five (45) days before the date tentatively set in the Notice for the passage of the ordinance authorizing the issuance of the Certificates. Section 4. The Mayor, City Manager, Chief Financial Officer, City Secretary and other appropriate officials of the City, the City's financial advisor, Hilltop Securities Inc., and bond counsel, Bracewell LLP, are authorized and directed to proceed with the preparation of the Preliminary Official Statement and the Notice of Sale, if any, and to make other necessary arrangements for the sale of the Certificates at a future meeting of the City Council of the City. Section 5. For purposes of section 1.150-2(d) of the Treasury Regulations, this Notice serves as the City's official declaration of intent to use proceeds of the Certificates to reimburse itself from Certificates issued in the maximum principal amount and for expenditures paid in connection with the Financed Project, as set forth in Exhibit A hereof. Any such reimbursement will only be made (i) for an original expenditure paid no earlier than 60 days prior to the date hereof and (ii) not later than 18 months after the later of(A) the date the original expenditure is paid or (B) the date of with the project to which such expenditure relates is placed in service or abandoned, but in no event more than three years after the original expenditure is paid. Section 6. The City reasonably expects that the maximum principal amount of obligations issued to reimburse the City for the costs associated with the Financed Project will be $ Section 7. The City hereby authorizes the preparation and distribution of a Notice of Sale and Preliminary Official Statement relating to the Certificates and authorizes the Chief Financial Officer or City Manager to approve the final form of and deem final such Preliminary Official Statement within the meaning and for the purposes Resolution No. 2026-010 2 of paragraph (b)(1) of Rule 15c2-12 of the United States Securities and Exchange Commission. Section 8. The Mayor, City Manager, the Chief Financial Officer, City Secretary, and other officers and agents of the City are hereby authorized and directed to do any and all things necessary or desirable to carry out the provisions of this resolution. Section 9. This resolution shall take effect immediately from and after its passage by the City Council of the City. (Signature page follows) Resolution No. 2026-010 3 INTRODUCED, E PASSED by the affirmative vote of the City Council of the City of Grapevine, Texas this 3rd day of March 2026. APPROVED: William D. Tate Mayor ATTEST` p -. V a s t Tara Brooks City Secretary APPROVED AS TO FORM: 7 ft (7)ffi Matthew C.G. Boyle City Attorney Signature Page to,Notice of Intent Resolution EXHIBIT A NOTICE OF INTENTION TO ISSUE CERTIFICATES OF OBLIGATION NOTICE IS HEREBY GIVEN that the City Council of the City of Grapevine, Texas (the "City"), will meet in the Council Chambers at the City Hall, 200 S. Main St., Grapevine, Texas, the regular meeting place of the City Council, at 7.30 p.m. on the 21 st day of April, 2026, which is the time and place tentatively set for the passage of an ordinance and such other action as may be deemed necessary to authorize the issuance of the City's certificates of obligation (the "Certificates"), in the maximum aggregate principal amount not to exceed $30,000,000, payable from the levy of a direct and continuing ad valorem tax against all taxable property within the City sufficient to pay the interest on this series of Certificates as due and to provide for the payment of the principal thereof as the same matures, as authorized by Chapter 271, Subchapter C, Texas Local Government Code, as amended, and from all or a part of the surplus revenues of the City's waterworks and sewer system, such pledge of surplus revenues being limited to $1,000, bearing interest at any rate or rates not to exceed the maximum interest rate authorized by law, as shall be determined within the discretion of the City Council of the City at the time of issuance of the Certificates, and maturing over a period not to exceed twenty-five (25) years from the date of issuance, for the purposes of evidencing the indebtedness of the City for all or any part of the costs associated with the (i) designing, developing, constructing, renovating, improving and equipping the City's water and wastewater system and facilities, including the water treatment plant; (ii) designing, developing, constructing, and improving drainage and flood control projects including lift stations, pump stations, water towers, communication equipment, water lines, sewer line and their associated appurtenances; and (iii) professional services incurred in connection with items (i)through (ii), and to pay the costs incurred in connection with the issuance of the Certificates. The estimated combined principal and interest required to pay the Certificates on time and in full is $45,898,425. Such estimate is provided for illustrative purposes only, and is based on an assumed interest rate of 4.50%. Market conditions affecting interest rates vary based on a number of factors beyond the control of the City, and the City cannot and does not guarantee a particular interest rate associated with the Certificates. As of the date of this notice, the aggregate principal amount outstanding of tax-supported debt obligations of the City is $139,205,000, and based on the City's expectations, as of the date of this notice the combined principal and interest required to pay all of the outstanding tax-supported debt obligations of the City on time and in full is $173,381,779. WITNESS MY HAND AND THE OFFICIAL SEAL OF THE CITY, this 3rd day of March, 2026. /s/Tara Brooks, City Secretary City of Grapevine, Texas Error! Unknown document property name.