Title
Consider/Discuss/Act on an Ordinance Authorizing the Issuance of “City of McKinney, Texas, General Obligation Refunding and Improvement Bonds, Series 2016”, and Delegating Matters Relating to the Sale to an Authorized City Official(s)
Summary
COUNCIL GOAL: Financially Sound Government
MEETING DATE: May 17, 2016
DEPARTMENT: Financial Services
CONTACT: Mark Holloway, Acting Chief Financial Officer
RECOMMENDED CITY COUNCIL ACTION:
• Approval of Ordinance
ITEM SUMMARY:
• The City is issuing new General Obligation Bonds in the amount of $21,400,080 for the following projects:
o $11.7 million for Municipal Facilities
o $3.0 million for Public Safety
o $4.4 million for Drainage
o $2.3 million for Public Works Facilities
• The bonds are offered for sale in a competitive bidding process to be conducted electronically via PARITY through Wednesday, May 25, 2016 until 10:00 AM, Central time.
• The City has the option to refund in whole or in part the Tax and Limited Pledge Waterworks and Sewer System Revenue Certificate of Obligations, Series 2006, maturing in years 2016 to 2026, and aggregating in par amount of $8,230,000.
• The City also has the option to refund in whole or in part the General Obligation and Refunding Bonds, Series 2006, maturing in years 2016 to 2026, and aggregating in par amount of $22,235,000.
• The City also has the option to refund in whole or in part the General Obligation Bonds, Series 2007 maturing in years 2016 to 2027 and aggregating in par amount of $13,785,000.
• Refunding bonds is similar to refinancing debt obligations to take advantage of lower interest rates.
• The current interest rate for the bonds ranges from 4.25% to 5.00% per annum.
• Additionally, approval of this Ordinance will designate the Interim City Manager and Acting Chief Financial Officer as Pricing Officers to execute the transaction. This will enable pricing of the bonds at such time as the market conditions are most favorable.
BACKGROUND INFORMATION:
• Continuing growth drives the need for major capital improvements.
• Applications have been made to both Standard and Poor’s (S&P) and Moody’s Investors Services, Inc. (Moody’s) to review the bond rating.
• The 2006 Tax and Limited Pledge Waterworks and Sewer System Revenue Certificates of Obligation, the 2006 General Obligation Refunding Bonds and the 2007 General Obligation Bonds were issued, sold and delivered subject to the right and authority of the City to refund them prior to maturity.
FINANCIAL SUMMARY:
• The total not to exceed principal amount for new issue and refunding is $68,000,000.
BOARD OR COMMISSION RECOMMENDATION: None.
RECOMMENDATION: N/A