City of Brentwood

City Administration

Current Agenda and Past Meeting Information

CITY COUNCIL AGENDA ITEM NO. 16

Meeting Date: September 9, 2008

Subject/Title: Approve a resolution authorizing the defeasance of the Sewer portion of debt on the Brentwood Infrastructure Financing Authority Water and Sewer Revenue Bonds 1996 Series A and approving a budget amendment in the Wastewater facility fund in the amount necessary for the defeasance, currently estimated to be $1,800,000 in fiscal year 2008/09.

Prepared by: Brian Kelleher, Accountant

Submitted by: Pamela Ehler, City Treasurer/Director of Finance and Information Systems

RECOMMENDATION
Approve a resolution authorizing the defeasance of the Sewer portion of debt on the Brentwood Infrastructure Financing Authority Water and Sewer Revenue Bonds 1996 Series A and approving a budget amendment in the Wastewater facility fund in the amount necessary for the defeasance, currently estimated to be $1,800,000 in fiscal year 2008/09.

PREVIOUS ACTION
On November 26, 1996, City Council approved Resolution No. 96-206 authorizing and approving the issuance of Water and Sewer Revenue Bonds 1996 Series A in an amount of $12,195,000 of which $9,701,123 was for water and $2,493,877 was for sewer.

BACKGROUND
In 1996 the Brentwood Infrastructure Financing Authority issued the Water and Sewer Revenue Bonds 1996 Series A in the amount of $12,195,000 to finance certain capital improvements to the Water System and Sewer System. These improvements consisted of additional water and sewer pipelines, pumping stations, system control and data acquisition, in addition to water wells and connections to the existing water system. The Water and Sewer Installment Sale Agreements allow the proceeds of the Bonds to be expended on “any additions, betterments, extensions or improvements to the Systems designated by the City Council”.

The costs of improvements to the Water System represented 79.55% or $9,701,122.50 and the projects funded were the Interim Water System, Zone #1 Water Line relocation, Lone Tree Water Line, Scada and several improvements to the Well Systems.

The costs of improvements to the Sewer System represented 20.45% or $2,493,877.50 and these funds were used to fund the Lone Tree Sewer Project.

The City will be refinancing the existing 1996 Water bonds in connection with the issuance of the bonds associated with the Surface Water Treatment Facility project. The City also has the opportunity to realize debt service savings through the defeasance, (retiring the remaining outstanding debt), of the Sewer portion of the 1996 Water and Sewer Bonds. The existing principal due on the sewer portion is currently $1,925,000. The total net present value benefit of paying off the bonds concurrently with the refinance of the 1996 Water portion of the 1996 bonds is approximately $469,000.

FISCAL IMPACT
The principal due on the sewer portion of the 1996 Water and Sewer Bond is $1,925,000 after making the July 1, 2008 bond payment. The trustee for the bond has approximately $183,000 in the reserve fund that will be applied to the defeasance; moreover, additional interest will accrue and the cost of the defeasance will be approximately $1,800,000. The payoff will realize a net present value savings calculated at approximately $469,000 and is scheduled to occur in November of 2008. The Wastewater facility fund will pay the defeasance and requires a one-time budget amendment of approximately $1,800,000 in fiscal year 2008/09.

Attachments:
Resolution

RESOLUTION NO.
RESOLUTION AUTHORIZING THE DEFEASANCE OF THE SEWER PORTION OF DEBT ON THE BRENTWOOD INFRASTRUCTURE FINANCING AUTHORITY WATER AND SEWER REVENUE BONDS 1996 SERIES A AND APPROVING A BUDGET AMENDMENT IN THE WASTEWATER FACILITY FUND IN THE AMOUNT NECESSARY FOR THE DEFEASANCE, CURRENTLY ESTIMATED TO BE $1,800,000 IN FISCAL YEAR 2008/09.

WHEREAS, on November 26, 1996, by Resolution No. 96-206, the City Council approved Resolution No. 96-206 authorizing and approving the issuance of Water and Sewer Revenue Bonds 1996 Series A in an amount of $12,195,000 of which $9,701,123 was for water and $2,493,877 was for sewer.

WHEREAS, the City used bond proceeds associated with the 1996 Water and Sewer Bond to finance certain capital improvements to the Sewer System. These improvements consisted of additional and sewer pipelines. The Sewer Installment Sale Agreements allow the proceeds of the Bonds to be expended on “any additions, betterments, extensions or improvements to the Systems designated by the City Council”.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Brentwood, as follows:

1. The Wastewater facility fund will pay the defeasance of approximately $1,800,000 on or around November 10, 2008.

2. Approve a one-time budget amendment in the Wastewater facility fund in the amount necessary for the defeasance, currently estimated to be $1,800,000 in fiscal year 2008/09.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting on the 9th day of September 2008, by the following vote:

City Administration

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