HomeMy WebLinkAboutFIN 2018-04-17 Item 2A - Ordinance - $20,000,000 Limited Tax General Obligation BondsCity of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Finance Committee
FROM: Peggy McCarthy, Finance Director
CC: Mayor Ekberg
DATE: April 11, 2018
SUBJECT: Ordinance Amending Bond Ordinance 2559, Finance the Public Works
Shops portion of the Public Safety Plan
ISSUE
Approve an ordinance amending bond ordinance 2559, allowing for bond maturities up to thirty years
and setting the expiration date for the Designated Representatives' authority at December 31, 2018.
BACKGROUND
The Public Safety Plan includes the siting and construction of Public Works Shops. On November 6,
2017, the City Council authorized the acquisition of property to site the shops, the justice center, and
fire station 54. On December 4, 2017, the City Council approved bond ordinance 2559 for the
issuance of up to $20 million of limited tax general obligation (LTGO) bonds for financing the
acquisition of property for the Public Works shops and to pay for soft costs through mid -2019. The
ordinance specified a final maturity date for the bonds of no later than December 1, 2038 and
granted authority to the Designated Representatives until one year after the effective date of the
ordinance.
DISCUSSION
A financial framework has been developed to model financing options for funding the Public Safety
Plan, including the Public Works shops. One financing option extends the $20 million LTGO bond
payment term to thirty years from the twenty-year period written into bond ordinance 2559. By
lengthening the maturity period, the annual debt service is reduced. Based on the assumptions
used by the City's financial advisor, PFM Financial Advisors LLC, in the attached Overview of Debt
Service Scenarios, the annual debt service savings using a 30 -year term rather than a 20 -year term
would be between $264,000 and $356,000 depending on whether interest only payments are made
during the construction period. Half of this annual savings would benefit the City's utility funds and
the other half would benefit the City's governmental funds.
The proposed amendment specifies that the final bond maturity date shall be no later than
December 1, 2048 and the authority granted to the Designated Representatives shall expire on
December 31, 2018. It is recommended that the City Council approve the amending ordinance to
allow for flexibility in structuring the bond sale and to reduce the estimated annual debt service
payments on the $20 million bonds.
RECOMMENDATION
The Council is being asked to approve the ordinance and consider this item at the April 23, 2018
Committee of the Whole meeting and subsequent May 7, 2018 Regular Meeting.
ATTACHMENTS
Draft amending bond ordinance.
Overview of Debt Service Scenarios, prepared by PFM Financial Advisors, LLC
Time Schedule for Bond Issuance
1
2
Frl'i 13) p6
Li n
L1 u I
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, AMENDING ORDINANCE NO.
2559 RELATING TO THE ISSUANCE OF ONE OR MORE
SERIES OF LIMITED TAX GENERAL OBLIGATION BONDS
TO FINANCE AND/OR REIMBURSE COSTS RELATED TO
THE ACQUISITION OF LAND AND THE CONSTRUCTION,
IMPROVEMENT AND EQUIPPING OF MAINTENANCE AND
OTHER CITY FACILITIES; PROVIDING FOR SEVERABILITY;
AND ESTABLISHING AN EFFECTIVE DATE.
WHEREAS, the City Council (the "Council") of the City of Tukwila, Washington
(the "City") has deemed it is in the best interest of the City to acquire certain parcels of
land, including through eminent domain, and to construct, improve and equip
maintenance and other City facilities (together, the "Project"); and
WHEREAS, after due consideration the Council adopted Ordinance No. 2559 on
December 4, 2017, authorizing the issuance and sale of one or more series of limited
tax general obligation bonds (the "Bonds") to pay all or a portion of the costs of the
Project and to pay costs of issuance for the Bonds; and
WHEREAS, the sale and issuance of the Bonds is contingent on satisfaction of
certain parameters relating to maximum interest rates, final maturity dates, redemption
terms and principal maturities as set forth in Ordinance No. 2559; and
WHEREAS, the Council now desires to amend Ordinance No. 2559 to extend the
final maturity date for the Bonds and other matters related thereto, as provided herein;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
Section 1. Definitions. Except as otherwise provided herein, definitions used in
this ordinance shall have the meanings set forth in Ordinance No. 2559.
W: Word Processing\Ordinances\LTGO Bonds -2018 -PW Shops Facility -amend Sec 12 4-10-18
PM:bjs
Page 1 of 4
3
4
Section 2. Amendment to Ordinance No. 2559: Section 12 (Sale of Bonds).
Section 12 (Sale of Bonds) of Ordinance No. 2559 is hereby amended to read as
follows:
Section 12. Sale of Bonds.
(a) Bond Sale. The Council has determined that it would be in the best interest of
the City to delegate to each Designated Representative, for a limited time, the authority
to determine the method of sale for each series of Bonds and to approve the final
interest rates, maturity dates, redemption terms and principal maturities for each series
of Bonds. Each series of Bonds issued pursuant to this ordinance may be issued at the
same or different times so long as each series complies with the terms hereof. Each
Designated Representative is hereby authorized to approve the issuance, from time to
time, of one or more series of Bonds and to approve whether the Bonds of such series
shall be sold in a private placement to a Direct Purchaser or to an Underwriter through
a competitive public sale or a negotiated sale, as set forth below.
(b) Direct Purchase. If a Designated Representative determines that the Bonds of
a series are to be sold by private placement, a Designated Representative shall select
the Direct Purchaser that submits the proposal that is in the best interest of the City.
Direct Purchase Bonds shall be sold to the Direct Purchaser pursuant to the terms of a
Loan Agreement.
(c) Negotiated Bond Sale. If a Designated Representative determines that the
Bonds of a series are to be sold by negotiated public sale, a Designated Representative
shall select the Underwriter that submits the proposal that is in the best interest of the
City. Such Bonds shall be sold to the Underwriter pursuant to the terms of a Bond
Purchase Contract.
(d) Competitive Sale. If a Designated Representative determines that the Bonds
of a series are to be sold at a competitive public sale, a Designated Representative
shall: (1) establish the date of the public sale; (2) establish the criteria by which the
successful bidder will be determined; (3) establish the criteria for a good faith deposit;
(4) cause notice of the public sale to be given; and (5) provide for such other matters
pertaining to the public sale as he or she deems necessary or desirable. A Designated
Representative shall cause the notice of sale to be given and provide for such other
matters pertaining to the public sale as he or she deems necessary or desirable. Such
Bonds shall be sold to the Underwriter pursuant to the terms of a Certificate of Award.
(e) Sale Parameters. Subject to the terms and conditions set forth in this Section
12, each Designated Representative is hereby authorized to approve the method of
sale and the final interest rates, aggregate principal amount, principal maturities, and
redemption rights for each series of Bonds in the manner provided hereafter so long as:
(1) the aggregate principal (face amount) amount of all Bonds issued from
time to time under this ordinance does not exceed $20,000,000;
W: Word Processing\Ordinances\LTGO Bonds -2018 -PW Shops Facility -amend Sec 12 4-10-18
PM:bjs
Page 2 of 4
(2) the final maturity date for each series of Bonds is no later than
Deco bcr 1, 203e December 1. 2048;
(3) the aggregate purchase price for each series of Bonds shall not be less
than 98% of the aggregate stated principal amount of such series of Bonds, excluding
any original issue discount; and
(4) the true interest cost for each series of Bonds (in the aggregate for such
series) does not exceed 4.5%.
Subject to the terms and conditions set forth in this section, each Designated
Representative is hereby authorized to execute the appropriate Sale Document on
behalf of the City. The signature of one Designated Representative shall be sufficient to
bind the City. Following the execution of a Sale Document, a Designated
Representative shall provide a report to the Council describing the final terms of the
Bonds sold pursuant to such Sale Document and approved pursuant to the authority
delegated in this section.
The authority granted to the Designated Representatives by this Section 12 shall
expire on December 31. 2018. one year after the effective date Es -,,f th s crd!nance. After
such date additional Council approval shall be necessary to sell and issue Bonds
pursuant to the terms of this ordinance.
(f) Delivery of Bonds; Documentation. Upon the passage and approval of this
ordinance and execution of the applicable Sale Document for a series of Bonds, the
proper officials of the City, including the Designated Representatives and the City Clerk,
are authorized and directed to undertake all action necessary for the prompt execution
and delivery of such series of Bonds to the purchaser thereof and further to execute all
closing certificates and documents required to effect the closing and delivery of the
Bonds in accordance with the terms of the applicable Sale Document. Such documents
may include, but are not limited to, documents related to a municipal bond insurance
policy delivered by an insurer to insure the payment when due of the principal of and
interest on all or a portion of such series of Bonds as provided therein, if such insurance
is determined by a Designated Representative to be in the best interest of the City.
Section 3. Severability; Ratification. Except as hereby amended, the remaining
terms and conditions of Ordinance No. 2559 are hereby ratified and confirmed in all
respects. All acts taken pursuant to the authority granted in this ordinance but prior to
its effective date are hereby ratified and confirmed. If any one or more of the covenants
or agreements provided in this ordinance to be performed on the part of the City shall
be declared by any court of competent jurisdiction to be contrary to law, then such
covenant or covenants, agreement or agreements, shall be null and void and shall be
deemed separable from the remaining covenants and agreements of this ordinance and
shall in no way affect the validity of the other provisions of this ordinance or of the
Bonds.
W: Word Processing\Ordinances\LTGO Bonds -2018 -PW Shops Facility -amend Sec 12 4-10-18
PM:bjs
Page 3 of 4
5
6
Section 4. Corrections by City Clerk. Upon approval of the City Attorney and
Bond Counsel, the City Clerk is hereby authorized to make necessary corrections to
this ordinance, including but not limited to the correction of clerical errors; references to
other local, state or federal laws, codes, rules, or regulations; ordinance numbering and
section/subsection numbering; and other similar necessary corrections.
Section 5. Effective Date. This ordinance or a summary thereof shall be
published in the official newspaper of the City, and shall take effect and be in full force
five days after passage and publication as provided by law.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON,
at a Regular Meeting thereof this day of , 2018.
ATTEST/AUTHENTICATED:
Christy O'Flaherty, MMC, City Clerk
APPROVED AS TO FORM BY:
Pacifica Law Group LLP, Bond Counsel
Allan Ekberg, Mayor
Filed with the City Clerk:
Passed by the City Council:
Published:
Effective Date:
Ordinance Number:
W: Word Processing\Ordinances\LTGO Bonds -2018 -PW Shops Facility -amend Sec 12 4-10-18
PM:bjs
Page 4 of 4
Year
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
204
204
204
204
204
Tota
30 -Year
City of Tukwila, Washington
Limited Tax General Obligation Bonds, 2018
Overview of Debt Service Scenarios
20 -Year
30 -Year (Interest only until 2022)
20 -Year (Interest only until 2022)
Principal
4
5
6
7
8
interest
Debt Service
Principal
Interest
Debt Service
;'
Principal
Interest
Debt Service
$452,625
$452,625
$449,500
$449,500
$451,500
$451,500
$446,875
$446,875
$275,000
905,250
1,180,250
$545,000
899,000
1,444,000
903,000
903,000
893,750
893,750
285,000
891,500
1,176,500
570,000
871,750
1,441,750
903,000
903,000
893,750
893,750
300,000
877,250
1,177,250
600,000
843,250
1,443,250
903,000
903,000
893,750
893,750
315,000
862,250
1,177,250
630,000
813,250
1,443,250
$330,000
903,000
1,233,000
$690,000
893,750
1,583,750
330,000
846,500
1,176,500
660,000
781,750
1,441,750
345,000
886,500
1,231,500
725,000
859,250
1,584,250
350,000
830,000
1,180,000
695,000
748,750
1,443,750
365,000
869,250
1,234,250
765,000
823,000
1,588,000
365,000
812,500
1,177,500
730,000
714,000
1,444,000
385,000
851,000
1,236,000
800,000
784,750
1,584,750
385,000
794,250
1,179,250
765,000
677,500
1,442,500
400,000
831,750
1,231,750
840,000
744,750
1,584,750
400,000
775,000
1,175,000
805,000
639,250
1,444,250
420,000
811,750
1,231,750
885,000
702,750
1,587,750
425,000
755,000
1,180,000
845,000
599,000
1,444,000
445,000
790,750
1,235,750
925,000
658,500
1,583,500
445,000
733,750
1,178,750
885,000
556,750
1,441,750
465,000
768,500
1,233,500
975,000
612,250
1,587,250
465,000
711,500
1,176,500
930,000
512,500
1,442,500
490,000
745,250
1,235,250
1,020,000
563,500
1,583,500
490,000
688,250
1,178,250
975,000
466,000
1,441,000
510,000
720,750
1,230,750
1,075,000
512,500
1,587,500
515,000
663,750
1,178,750
1,025,000
417,250
1,442,250
540,000
695,250
1,235,250
1,125,000
458,750
1,583,750
540,000
638,000
1,178,000
1,075,000
366,000
1,441,000
565,000
668,250
1,233,250
1,185,000
402,500
1,587,500
565,000
611,000
1,176,000
1,130,000
312,250
1,442,250
595,000
640,000
1,235,000
1,240,000
343,250
1,583,250
595,000
582,750
1,177,750
1,185,000
255,750
1,440,750
625,000
610,250
1,235,250
1,305,000
281,250
1,586,250
625,000
553,000
1,178,000
1,245,000
196,500
1,441,500
655,000
579,000
1,234,000
1,370,000
216,000
1,586,000
655,000
521,750
1,176,750
1,310,000
134,250
1,444,250
685,000
546,250
1,231,250
1,440,000
147,500
1,587,500
690,000
489,000
1,179,000
1,375,000
68,750
1,443,750
720,000
512,000
1,232,000
1,510,000
75,500
1,585,500
725,000
454,500
1,179,500
755,000
476,000
1,231,000
760,000
418,250
1,178,250
795,000
438,250
1,233,250
795,000
380,250
1,175,250
835,000
398,500
1,233,500
835,000
340,500
1,175,500
875,000
356,750
1,231,750
880,000
298,750
1,178,750
920,000
313,000
1,233,000
920,000
254,750
1,174,750
965,000
267,000
1,232,000
970,000
208,750
1,178,750
1,015,000
218,750
1,233,750
1,015,000
160,250
1,175,250
1,065,000
168,000
1,233,000
1,070,000
109,500
1,179,500
1,120,000
114,750
1,234,750
1,120,000
56,000
1.176.000
1,175,000
58,750
1,233,750
I $18,105,000
$17,676,375
$35,781,375
$17,980,000
$11,323,000
$29,303,000
$18,060,000
$18,399,750
$36,459,750
$17,875,000
$12,207,875
$30,082,875
Scenarios assume AA MMD as of 4/2/2018 plus 50 basis points cushion, $10 per bond Underwriter's Discount, $140k costs of issuance
Prepared by PFM Financial Advisors LLC
4/3/2018
8
pfm
City of Tukwila, Washington
Limited Tax General Obligation Bonds, 2018
As of March 26, 2018
MARCH
M T W T F S
APRIL
S M T W T F
12 3 12 3 4 5 6 7 1 2 3 4 5
4 5 6 7 8 9 10 8 9 10 11 12 13 14 6 7 8 9 10 11 12
11 12 13 14 15 16 17 15 16 17 18 19 20 21 13 14 15 16 17 18 19
18 19 20 21 22 23 24 22 23 24 25 26 27 28 20 21 22 23 24 25 26
25 26 27 28 29 30 31 29 30 27 '':'28 29 30 31
City Finance Director/City Manager/Staff. City
Pacifica Law Group LLP (Bond Counsel). BC
PFM Financial Advisors LLC (Financial Advisor): PFM
References to "All Parties" includes City, BC, and PFM
Date
Event
Responsibility
3/20-21
City mince approve:
FOMC Meet n r
Ott fi Orden
until/Ci
3/26 • Send current draft POS and list of information needs PFM
3/30 • Good Friday
4/4 • Comments provided on first draft POS
[4/6] • Financing Team call to review POS
By 4/6 • Rating application submitted
4/10 • Second draft POS distributed
Mid -April • Unaudited 2017 financial statements available
4/17-20 • Washington Public Treasurers Association Conference (WPTA)
4/17 • Comments provided on second draft POS All Parties
4/18 • Draft rating materials distributed PFM
Week of 4/23 • Rating agency prep call/meeting City/PFM
4/25 • Comments due on draft rating materials All Parties
4/27 • Third draft POS distributed PFM
4/27 • Final rating materials distributed PFM
Week of 4/30 • Bond rating agency call City/PFM
Week of 4/30 • Due diligence call to review POS All Parties
5/1-2 • FOMC Meeting
5/4 • Final comments provided on POS All Parties
5/6-9 • Government Finance Officers Association Conference (GFOA)
5/8 • POS distributed for final sign -off PFM
5/9 • Final sign -off on POS provided All Parties
By 5/10 • Receive bond rating
5/10 • POS posted PFM
5/17 • Bond sale All Parties
5/21 • OS distributed for final sign -off PFM
5/22 • Final sign-off/OS posted All Parties
5/28 • Memorial Day
5/31 • Bond Closing All Parties
All Parties
All Parties
PFM
PFM
City
9