M&C Review


COUNCIL ACTION:  Approved on 3/21/2017 - Ordinance No. 22633-03-2017 & 22634-03-2017

DATE: 3/21/2017 REFERENCE NO.: G-18974 LOG NAME: 13W&S_DEBT_RESERVE
CODE: G TYPE: NON-CONSENT PUBLIC HEARING: NO
SUBJECT:   Authorize Transfer of $4,110,182.83 from the Water & Sewer Prior Lien Debt Service Fund to the Water & Sewer Debt Service Reserve Fund and Adopt Appropriation Ordinances (ALL COUNCIL DISTRICTS)

RECOMMENDATION:

It is recommended that the City Council:

1.  Adopt the attached ordinance increasing appropriations in the Water & Sewer Prior Lien Debt Service Fund by $4,110,182.83 and decreasing restricted cash by the same amount, for the purpose of making a transfer to a separate Water & Sewer Debt Service Reserve Fund;

2.  Authorize a transfer in the amount of  $4,110,182.83 from the Water & Sewer Prior Lien Debt Service Fund to the Water & Sewer Debt Service Reserve Fund; and

3.  Adopt the attached ordinance increasing estimated receipts and appropriations in the Water & Sewer Debt Service Reserve Fund by $4,110,182.83, to better document compliance with bond obligations.

 
DISCUSSION:

The purpose of this Mayor and Council Communication (M&C) is to take actions to establish the Water and Sewer System's Debt Service Reserve Fund as an independently and distinctly presented fund on the City's financial records in order to better document on-going compliance with the requirements of the Master Ordinance Establishing the City of Fort Worth, Texas Water and Sewer System Revenue Financing Program (Master Ordinance) and associated bond covenants.

The Master Ordinance requires the City to create, establish, and maintain a separate fund designated as the Reserve Fund, which is maintained for the benefit of the holders of certain outstanding first-lien, or parity, obligations of the Water and Sewer System.  For each series of obligations that are issued, the supplemental ordinance authorizing sale of the debt instruments outlines the reserve requirements, if any, that must be met.

Historically, required reserves were maintained as restricted cash within the Water & Sewer Debt Service Funds on the City's General Ledger. Following implementation of the PeopleSoft financial system, the Water & Sewer Debt Service Funds, including the restricted cash for reserves, were moved under the auspices of the overarching Water and Sewer Operating Fund. At all times funds and assets associated with meeting the reserve requirements were kept separate and distinct from other aspects of the Debt Service Fund and maintained for the benefit of debt holders as required.  

Following further review of the Master Ordinance and conversations with bond counsel, Staff has determined it would be easier to document on-going compliance with the Master Ordinance and associated bond covenants, where applicable, if the Reserve Fund were separated out on the financial records.  Adoption of this M&C and the attached ordinances will effectuate that change.  

This M&C does not request approval of a contract with a business entity.

 
FISCAL INFORMATION/CERTIFICATION:

The Director of Finance certifies that upon approval of the above recommendations and adoption of the attached appropriation ordinance, funds will be available in the Water & Sewer Debt Service Reserve Fund in compliance with the Master Ordinance and Bond Covenants, as applicable.

TO
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FROM
    Fund Department
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Program Activity Budget
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Submitted for City Manager's Office by:
Jay Chapa (5804)
Originating Department Head:
Aaron Bovos (8517)
Additional Information Contact:
Anthony Rousseau (8338)

 
 
ATTACHMENTS
  AO - Prior Lien Fund.docx
  AO - Reserve Fund.docx