AGENDA CAPTION:
Title
Consider approval of Ordinance 2025-12, on the first and final reading, authorizing the issuance and sale of an approximate amount of $37,655,000.00 of Combination Tax and Revenue Certificates of Obligation, Series 2025, levying an ad valorem tax and pledging certain surplus revenues in support of the certificates; approving an official statement, a paying agent/registrar agreement for improving, constructing, equipping, acquiring, or designing the city's: airport; cemetery; parks and recreation facilities; streets, alleys, and sidewalks; public safety facilities; stormwater management for flood control and drainage; electric utility system; and the payment of professional services in connection therewith including legal, fiscal and engineering fees and the costs of issuing the certificates of obligation and other matters related thereto; and providing for the approval of this Ordinance 2025-12, on one reading as authorized by state law.
Body
Meeting date: April 15, 2025
Department: Finance and Engineering/Capital Improvement
Amount & Source of Funding
Funds Required: N/A
Account Number: N/A
Funds Available: N/A
Account Name: N/A
Fiscal Note:
Prior Council Action: September 17, 2024, City Council approved Ordinance 2024-40(b), approving the Fiscal Year 2025 Capital Improvement Program. February 4, 2025, City Council received an overview of the projects included in the FY 2025 CIP. February 18, 2025, City Council approved Resolution #2025-28R, authorizing proceeding with the issuance of Certificates of Obligation and directing the publication of Notice of Intention to issue the certificates.
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Background Information:
The Fiscal Year 2025 Capital Improvement Program (CIP) was approved during the budget process and adopted on September 17, 2024. At the February 4, 2025, City Council Work Session, Shaun Condor, Director of Engineering/Capital Improvements, provided an overview of the projects that make up the Fiscal Year 2025 CIP, including previously deferred projects. Projects included in the CIP are funded by various sources, including cash, impact fees, grants, and debt obligations.
This item is for projects that will be funded by certificates of obligation. The first step in issuing certificates of obligation was for City Council to consider a resolution directing the publication of a notice of the City’s intent to issue the debt obligation. City Council passed resolution #2025-28R on February 18, 2025. Two public notices were published on February 23, 2025, and March 2, 2025, in the San Marcos Daily Record and the notice is posted on the City’s website. The final action by City Council is the consideration of this ordinance authorizing the issuance of the certificates of obligation.
As part of the issuance process, the City applied for a rating through S&P Global Ratings. S&P assigned its AA rating to the series 2025 certificates of obligation and affirmed the City’s AA rating on existing debt, with a stable outlook. The AA rating is a strong rating.
Projects to be funded through the issuance of certificates of obligation span multiple functions that include the airport, cemetery, public safety, downtown alley reconstruction, parks and recreation, streets, electric, and stormwater. Each project is correlated with a specific fund and the associated debt obligation must be repaid by that fund. During the Fiscal Year 2025 budget process, City Council approved using the General Fund’s debt capacity for stormwater projects, so stormwater projects will be repaid by the General Fund and the Stormwater Fund.
The amount of debt obligations to be issued for each fund is below:
General Fund $15,605,000
Stormwater 17,950,000 ($12,950,000 repaid by the General Fund and $5,000,000 by the Stormwater Fund)
Electric 4,100,000
Total All Funds $37,655,000
The certificates of obligation are expected to be sold in a competitive sale with bids scheduled to be received the morning of April 15, 2025. A draft of the ordinance is attached, and the final version will be provided on April 15, 2025, after the certificates of obligation are priced. The attached draft is not complete because the information will not be known until after the certificates are priced. The final version will include all information.
Council Committee, Board/Commission Action:
N/A
Alternatives:
N/A
Recommendation:
City Council approve the ordinance authorizing the issuance of Combination Tax and Revenue Certificates of Obligation, Series 2025, in the amount not to exceed $37,655,000.