Item Coversheet

CITY COUNCIL AGENDA COMMUNICATION
AGENDA DATE:JuneĀ 9, 2020
SUBJECT:

Consider all Matters Incident and Related to the Issuance and Sale of "Allen Economic Development Corporation Sales Tax Revenue Bonds, Taxable Series 2020", Including the Adoption of a Resolution Approving the Resolution of the Board of Directors of the Corporation Authorizing the Issuance of Such Bonds. 

STAFF RESOURCE:

Eric Cannon, Chief Financial Officer

BOARD / COMMISSION ACTION:

On May 20, 2020, the Allen  Economic Development Corporation (AEDC) Board of Directors Considered Approval of a Parameters Resolution Authorizing the Issuance of Sales Tax Revenue Bonds, Taxable Series 2020.

ACTION PROPOSED:

Adopt a Resolution Approving the Resolution of the Board of Directors of the Corporation Authorizing the Issuance of the "Allen Economic Development Corporation Sales Tax Revenue Bonds, Taxable Series 2020". 




BACKGROUND

Attached is a Resolution prepared by the City's bond counsel, Norton Rose Fulbright US L.L.P., that approves the resolution of the Allen Economic Development Corporation authorizing the issuance of its Sales Tax Revenue Bonds, Taxable Series 2020. The AEDC's resolution requires certain parameters set forth in Section 3 of the resolution to be met at the time the bonds are priced.

 

The bond issue is expected to be in the approximate amount of $1,800,000. The bonds are for reimbursement of land and facility acquisition.

 

The maximum sales tax revenue bonds that can be outstanding is restricted by a requirement that the pledged revenues (sales taxes) are not less than 1.50 times the average annual debt service of the total bonds outstanding. This bond issue will result in a 5.59 times debt service coverage, which is above the restricted requirement.

 

The term of the taxable bonds are 10 years and the true interest cost on the bonds is projected to be 2.7%. The  bonds will not be priced until June 30, 2020, so final interest rates are an estimate at this time.

 

The Paying Agent/Registrar is The Bank of New York Mellon. The bank will be responsible for maintaining the ownership records of the bonds and for paying the principal and interest to the registered bondholders as the amounts become due on the payment dates. The Paying Agent/Registrar Agreement is attached.

 

The AEDC Resolution approved by the AEDC Board of Directors on May 20, 2020, anticipated pricing of the bonds on June 30, 2020, with a closing date in July 29, 2020.


BUDGETARY IMPACT

The impact on the AEDC budget over the term of this debt on an annual basis would be approximately $250,000 which is consistent with the projected amount approved in the AEDC revised budget. Property taxes of the City are not pledged for the repayment of the sales tax bonds.


STAFF RECOMMENDATION

Staff recommends that the City Council adopt a resolution approving the resolution of the Allen Economic Development Corporation providing for the issuance of its sales tax revenue bonds, Taxable Series 2020, and resolving other matters incident and related to the issuance of the bonds.



MOTION

I make a motion to adopt Resolution No. _____________ approving the resolution of the Allen Economic Development Corporation providing for the issuance of its Sales Tax Revenue Bonds, Taxable Series 2020, and resolving other matters incident and related to the issuance of the bonds.



ATTACHMENTS:
Description
Resolution
AEDC Parameters Resolution