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    9. a.    
BAYTOWN CITY COUNCIL MEETING
Meeting Date: 05/14/2020  
Subject:    Approving the Issuance of Bonds by Harris County Municipal Utility District No. 459.
Prepared for: Victor Brownlees Prepared by: Karen Horner, Legal
Department: Finance  

Information
ITEM
Consider a resolution approving the issuance of $4,750,000 Unlimited Tax Bonds, Series 2020 by Harris County Municipal Utility District No. 459 as meeting the requirements of Section 98-703(17) of the Code of Ordinances, Baytown, Texas.
PREFACE
This proposed resolution approves the issuance of $4,750,000 Unlimited Tax Bonds, Series 2020 by Harris County Municipal Utility District No. 459 ("MUD 459") as meeting the requirements of Section 98-703(17) of the Code of Ordinances, Baytown, Texas.  Pursuant to Section 98-703(17)(b), the Finance Department has determined that the proposed issuance meets the requirements of this section and has timely submitted this item to the City Council for its approval as meeting the requirements of its ordinance.

MUD 459 is an in-city municipal utility district, which must comply with Section 98-703 of the Code of Ordinances (the "Code") dealing with the issuance of bonds.  Specifically, MUD 459 must provide a copy of its application with the Texas Commission on Environmental Quality (TCEQ) for the approval of projects and bonds, a copy of such the staff memorandum of Texas Commission on Environmental Quality approving its projects and bonds, a copy of its proposed bond order, preliminary official statement, bid form and notice of sale the bonds.  Additionally, the following conditions must be satisfied:
  • The purpose for which the proceeds of the proposed bonds may be used must be limited to one or more of the following and no others:
    • Designing, purchasing and/or constructing or otherwise acquiring (i) waterworks facilities to provide water supply for municipal, domestic, and commercial uses, excluding industrial uses, (ii) wastewater facilities to collect, transport, process, dispose of and control all domestic or communal wastes, excluding industrial waste, whether in fluid, solid or composite state, or (iii) stormwater drainage and detention facilities to gather, conduct, divert and control local stormwater or other local harmful excesses of water in the municipal utility district,
    • Purchasing, constructing, owning, operating, repairing, improving, extending or otherwise acquiring interests in real property, improvements, facilities, appliances, equipment, buildings, plants or structures necessary or incidental to the operation of waterworks facilities, wastewater facilities, or stormwater drainage facilities. Proceeds of the bonds for costs of operations of the municipal utility district shall not exceed ten percent of the issuance amount; and
    • All costs of issuance of the bonds (including but not limited to legal fees, financial advisory fees, administrative and organizational fees and expenses and costs of operations during construction, bond discount, capitalized interest, developer interest, creation costs, printing expenses, publication expenses and contingencies relative to facilities not yet under contract). Proceeds of the bonds for costs of operations of the municipal utility district shall not exceed ten percent of the issuance amount.
  • The terms of such bonds must expressly provide that the municipal utility district reserves and shall have the right to redeem the bonds not later than the 15th anniversary of the date of issuance, without premium;
  • The bonds, except refunding bonds, must be sold after the taking of public bids therefor;
  • None of such bonds and bonds sold to a federal or state agency, other than refunding bonds, will be sold for less than 95 percent of par;
  • The net effective interest rate on bonds so sold, taking into account any discount or premium as well as the interest rate borne by such bonds, does not exceed two percent above the highest average interest rate reported by the Daily Bond Buyer in its weekly "20 Bond Index" during the one-month period next preceding the date notice of the sale of such bonds is given and bids for the bonds will be received not more than 45 days after notice of sale of the bonds is given;
  • The maximum term of any debt issuance shall be no greater than 25 years;
  • The minimum par amount of any bonds issued, except a final issue, shall be $1,000,000.00;
  • Each issue of bonds shall be structured to achieve either level principal payments or level debt service payments, excluding the first two years of debt service;
  • The municipal utility district shall submit to the city pro forma cash flows prepared in a manner consistent with the financial feasibility rules of the Texas Commission on Environmental Quality evidencing a municipal utility district tax rate (both maintenance and operations rate and interest and sinking rate combined) not to exceed $1.50 per $100.00 assessed valuation;
  • Each bond issue shall not include more than two years of capitalized interest; and
  • The municipal utility district's resolution authorizing the issuance of the municipal utility district's bonds must contain a provision that the pledge of the revenues from the operation of the municipal utility district's water and sewer and/or drainage system to the payment of the municipal utility district's bonds will terminate when and if the city takes over the assets of the municipal utility district and assumes all of the obligations of the municipal utility district.
As noted above, the Finance Department has reviewed the documentation submitted and believes that it meets the standards contained in Section 98-703 of the Code.
RECOMMENDATION
Staff recommends approval.
Attachments
Resolution - HCMUD #459 Bonds
Cover Letter & Memo of Compliance from HCMUD #459
Attachment A - TCEQ Order and Staff Memo
Attachment B - Proposed Bond Order
Attachment C - POS
Attachment D - Official Bid Form
Attachment E - Official Notice of Sale
Attachment F - Debt Service Cash Flow

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