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Home My WebLink AboutCOW 2018-04-23 Item 4B - Ordinance - $20,000,000 Limited Tax General Obligation BondsCOUNCIL AGENDA SYNOPSIS Initials Meeting Date Prepared by Mayor's review Council review 04/23/18 PMc L ) i LI 05/07/18 PMc ❑ Bid Award Mtg Date ❑ Public Hearing Mtg Date ❑ Other Mtg Date CATEGORY /1 Discussion Ordinance Mtg Date Mtg Date 05/7/18 SPONSOR ❑Council ❑Mayor ❑HR ❑DCD Fire ❑TS ❑P&R ❑Police ❑PW Court ►1 Finance ITEM INFORMATION ITEM No. 4.B. STAFF SPONSOR: PEGGY MCCARTHY ORIGINAL AGENDA DA"1'L:: 04/23/18 AGENDA ITEM TITLE Amend bond ordinance 2559 to December 1, 2048 and the Designated at December 31, 2018. establish the Representatives' latest bond maturity date as authorization expiration date 4/23/18 ❑ Motion Mtg Date ❑ Resolution Mtg Date ❑ Bid Award Mtg Date ❑ Public Hearing Mtg Date ❑ Other Mtg Date CATEGORY /1 Discussion Ordinance Mtg Date Mtg Date 05/7/18 SPONSOR ❑Council ❑Mayor ❑HR ❑DCD Fire ❑TS ❑P&R ❑Police ❑PW Court ►1 Finance SPONSOR'S Bond ordinance 2559 was approved in December 2017. This amendment extends the latest SUMMARY bond maturity date to December 1, 2048 from December 1, 2038 as stated in the original bond ordinance and sets the Designated Representatives' authorizaiton expiration date as December 31, 2018 rather than one year from the effective date of ordinance 2559, as stated in the original bond ordinance. REVIEWED BY ❑ C.O.W. Mtg. ❑ CDN Comm ❑ Trans &Infrastructure ❑ Arts Comm. DALE: 4/17/18 ►/ Finance Comm. ❑ Public Safety Comm. Comm. ❑ Planning Comm. CHAIR: QUINN ❑ Parks COMMI1`1EE RECOMMENDATIONS: SPONSOR/ADMIN. COMMIIME Finance Department Unanimous Approval; Forward to Committee of the Whole COST IMPACT / FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED $ $ Fund Source: Comments: MTG. DATE RECORD OF COUNCIL ACTION 04/23/18 MTG. DATE ATTACHMENTS 04/23/18 Informational Memorandum dated 04/11/18 (Updated after Finance Committee) Draft amending bond ordinance Overview of Debt Service Scenarios Time Schedule for Bond Issuance Minutes from the Finance meeting of 4/17/18 5/7/18 114 City 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 Revised Updated Following April 17Finance Committee Meeting (see underlined text below) 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. The Council has requested the bond sale take place after the larger decision about the Public Safety Plan financing has been made. The Committee unanimously approved moving forward with the amended bond ordinance to provide maximum flexibility in the financing decisions. 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 115 116 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 4 117 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 118 Page 2 of 4 (2) the final maturity date for each series of Bonds is no later than December 1, 2038 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. _ - . - - - - - - • - - _ . - _ _ _ _ -. 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 4 119 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 Allan Ekberg, Mayor APPROVED AS TO FORM BY: Filed with the City Clerk: Passed by the City Council: Published: Effective Date: Pacifica Law Group LLP, Bond Counsel Ordinance Number: W: Word Processing\Ordinances\LTGO Bonds -2018 -PW Shops Facility -amend Sec 12 4-10-18 PM: bjs 120 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 2044 2045 2046 2047 2048 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 Princi.al I Interest Debt Service Principal Interest Debt Service Principal Interest Debt Service $452,625 $452,625 $449,500 $449,500 $451,500 $451,5001 $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 $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 pfm City of Tukwila, Washington Limited Tax General Obligation Bonds, 2018 As of March 26, 2018 MARCH S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 APRIL T W T F S MAY 1 2 3 4 5 6 7 1 2 3 4 5 8 9 10 11 12 13 14 6 7 8 9 10 11 12 15 16 17 18 19 20 21 13 14 15 16 17 18 19 22 23 24 25 26 27 28 20 21 22 23 24 25 26 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 12/4 3/20-21 City Council approves Bond Ordinance FOMC Meeting Council/City 3/26 • Send current draft POS and list of information needs 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 4/18 • Draft rating materials distributed Week of 4/23 • Rating agency prep call/meeting 4/25 • Comments due on draft rating materials 4/27 • Third draft POS distributed 4/27 • Final rating materials distributed Week of 4/30 • Bond rating agency call Week of 4/30 • Due diligence call to review POS 5/1-2 • FOMC Meeting 5/4 • Final comments provided on POS 5/6-9 • Government Finance Officers Association Conference (GFOA) 5/8 • POS distributed for final sign -off 5/9 • Final sign -off on POS provided By 5/10 • Receive bond rating 5/10 • POS posted 5/17 Bond sale 5/21 • OS distributed for final sign -off 5/22 • Final sign-off/OS posted 5/28 • Memorial Day 5/31 • Bond Closing 122 PFM All Parties All Parties PFM PFM City All Parties PFM City/PFM All Parties PFM PFM City/PFM All Parties All Parties PFM All Parties PFM All Parties PFM All Parties All Parties City of Tukwila City Council Finance Committee FINANCE COMMITTEE Meeting Minutes April 17, 2018 - 5:30 p.m. - Hazelnut Conference Room, City Hall Councilmembers: De'Sean Quinn, Chair; Dennis Robertson, Kate Kruller Staff: Peggy McCarthy, Vicky Carlsen, Laura Crandall, Jay Wittwer, Brandon Miles, Gail Labanara, Rachel Bianchi, Bruce Linton, Laurel Humphrey CALL TO ORDER: Committee Chair Quinn called the meeting to order at 5:30 p.m. I. PRESENTATIONS II. BUSINESS AGENDA A. Ordinance: Limited Tax General Obligation Bonds Staff is seeking Council approval of an ordinance that would amend Ordinance 2559, which *authorized issuance of up to $20 million of limited tax general obligation (LTGO) bonds for financing property acquisition for the Public Works shops and to pay for soft costs through mid - 2019. This amendment would allow for bond maturities up to thirty years and set the expiration date for the Designated Representatives' authority to be December 31, 2018. One financing option for the Public Safety Plan extends the $20 million LTGO bond payment to thirty years from the original twenty-year period, which could save the City between $264,000 and $356,000 depending on whether interest only payments are made during the construction period, which is a common practice. These savings would benefit the City's utility and governmental funds. Passage of this ordinance would provide the flexibility for either 20 or 30 years. The bond sale is currently scheduled for May 17, 2018. The Committee indicated support for the flexibility to choose the term, but agreed that decision is part of the larger recommendation on Public Safety Plan financing which will not occur until late May or June. Since the May 17, 2018 sale date does not provide enough time for a holistic decision, the Committee asked staff to work with Bond Counsel to revise the schedule to show an alternative that accommodates this timeline. Chair Quinn asked that the memo be updated to call attention that the bond sale is contingent on the Council decision on Public Safety Plan financing. UNANIMOUS APPROVAL. FORWARD TO APRIL 23, 2018 COMMITTEE OF THE WHOLE. B. Fire and Parks Impact Fees Staff is seeking Council approval of a package of legislation to update Fire and Impact Fees for the City. The City contracted with Berk Consulting to obtain a comprehensive study of growth, capital plans and facilities, level of service standards and more to develop a maximum allowable impact fee for residential and commercial/non-residential properties. These fees were then compared with the fees of neighboring jurisdictions to assess regional competitiveness and affordability. Staff recommends reducing the fees proposed by the Berk study by 40% to bring 123