City Council Regular Session Agenda


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  Agenda Item 6.       
Meeting Date: 05/21/2019  
Item Title:    Water and Sewer System Revenue Bonds, Series 2019 and Principal Forgiveness Agreement with the Texas Water Development Board
Submitted By: Matt Watson

Summary of Request/Problem
At the April 1, 2019 Work Session, Council considered the issuance of $6,670,000 of Water and Sewer System Revenue Bonds, Series 2019 to be purchased by the Texas Water Development Board (TWDB) at a below market interest rate. In addition, Council considered the execution of a Principal Forgiveness Agreement with the TWDB for $975,037. The purpose of this transaction is to receive financial assistance from the TWDB totaling $7,645,037 to fund the multi-year Radio Read Water Meter Retrofit project approved in the 2019 CIP.
Recommendation/Action Requested and Justification
On February 25, 2019, the TWDB approved a commitment for financial assistance in the amount of $7,645,037 from the Drinking Water State Revolving Fund (DWSRF) through the TWDB's proposed purchase of $6,670,000 City of Garland, Texas Water and Sewer System Revenue Bonds, Series 2019 and the execution of a Principal Forgiveness Agreement in the amount of $975,037.

The Financial Service Department and the City's Financial Advisor, Hilltop Securities, have evaluated the debt service cost associated with the DWSRF program. Due to the $975,037 in principal forgiveness and a below market interest rate of approximately 1.2%, the DWSRF program is estimated to save the Water Utility Fund an additional $3.5 million in debt service cost over the next 20 years, when compared to the debt service cost associated with the continued use of the CP Program.

Therefore, in order to secure savings of $3.5 million in debt service cost, Staff and the City's Financial Advisor recommend City Council approve an ordinance authorizing the issuance of $6,670,000 of Water and Sewer System Revenue Bonds, Series 2019 to be purchased by the TWDB, as well as a resolution authorizing the execution of a Principal Forgiveness Agreement with the TWDB in the amount of $975,037.
Attachments
Draft DWSRF Ordinance
DWSRF Resolution Approving Principal Forgiveness Agreement


    

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