Travis County Commissioners Court
June 12, 2007
Item 10
Let's take up number 10. That's to can consider tand ache appropriate action on budget amendments, consider and take appropriate action on recommended issuance of summer 2007 on long-term certificate of obligation for the Travis County jail facility improvement project and b, consider and take appropriate action on adongs of order authorizing publication of notice of intent to issue certificates of obligation.
>> 10-a is seeking authorization from the court to proceed with the summer issuance. As you recall, this is related to the jail project. Basically what this is doing is accelerating the fy '08 issuance into summer of fy 2007. This is due to the fact that now that we've signed a contract we know the terms of that contract and we want to make sure that we have sufficient cash on hand. We thought it was prudent not to tie up the money from the unallocated preserve for approximately six months of the year, therefore we are recommending the acceleration of this and a summer issuance. I should note that with this issuance the jail project currently approved budget of 63.750, we will have issued 72.3 million of that, be and there will be a discussion this summer of amending that budget or maintaining that budget, whatever the court chooses; however, I think we have signed a contract that exceeds that currently approved budget. 10-b is also the order authorizing and I have with me glen and ladd our financial advisor and bond counsel. And I'm happy to answer any questions before I turn it over to them.
>> if we know we're about a million short, we have good reason not to go ahead and increase the issuance by that much?
>> I didn't understand the question.
>> you indicated that the total amount available would be a little short of the amount needed.
>> well, the total amount needed for the contract to proceed in the fall is 24 and a half million. What I was discussing at the end there was an overview of the budget and the status of the budget of the jail project. Is that what you were referring to?
>> so we're short.
>> correct.
>> what's our reason for not going ahead and getting the full amount?
>> this will bridge us until the spring of '08. And the reason for that is there's no reason to issue the last amount that has not been approved yet until the spring because we don't need that kind of cash flow right now.
>> this is what we need.
>> correct.
>> judge, going over with vin son and elkins, the action item that you have before you is the authorization of the publication of notice of the co's. I'd like to point out one thing for you. The proposed sale date is July 31st. And if you feel like we're here a little bit earlier than usual with the notice, you would be correct. As a result of a change in the law related to certificates of obligation, the notice provision -- the provision for publication of notice now requires publication 31 days in advance of the proposed sale date rather than 15 days prior to the sale date. So we've built that into the calendar to take into account that change in law.
>> judge, I'm ladd pattillo, financial advisor, and Commissioners. We believe we can have this sale this summer. There may be -- there has been already in the last two weeks gone up in the market interest rates. You've noticed that in the stock market and the bond market and things in the news. We will follow our practice that we issue when we need the money rather than trying to guess about interest rate. It has not been a large run-up. I still think we'd be under 475, somewhere like that, but I really try not to predict the future on interest rates.
>> and I should mention one thing also, that because we are accelerating the issuance, this will have an impact on fy '08 debt service and therefore the fy '08 tax for the debt service. I have put in my memo that we are expecting or projecting that the debt service will increase from the 67.6 million to approximately 70 million. That is probably a little bit on the high side. I'm going to work with ladd today actually on getting better figures, but you should know at least that there will be an impact in '08 because we will have a payment in '08.
>> for those watching, we have talked about state variance beds over the last two or three years. This is basically to get the money to build the jail renovation, jail construction project. In return the variance beds -- to return the variance beds to the state of Texas. It authorized us 13 years ago to use --
>> [inaudible - no mic]. Now these beds, probably 65% or so, will really replace the state variance beds. We've been authorized to put two inmates in a space really designed for one, and the state starting six years ago wanted us to discontinue using that authorization. And the only way for us to do that was to issue the beds. So this debt we're issuing really to get this done, we have committed to the state over the last two years and our plan is in fact to build these beds. But as long as we delay really addressing the issue, we've been hoping our population would go down or state standards would change. Neither happened. And so about two years ago we said that we need the additional beds and issue this debt. So in terms of timetable we need to approve the issuance of these co's today?
>> you need to approve the order authorizing the publication of the notice of the intent to issue today.
>> to begin the 31 days.
>> to start the 31 day process, we'll put the notice in the statesman for two week and we'll be back on July 31st with the order for the issuance.
>> and we'll take bids that day.
>> so anyone that wants to provide input will have other opportunities to do so.
>> correct.
>> questions?
>> I have a question. Is it the debt service, the change in debt service estimation, is that the sole reason for the 1,420,000 difference?
>> no, ma'am. That's really two different issues. The debt service, what we're doing there is just accelerating the debt into fy '07 and therefore we will have a payment in fy '08. Whereas previously the debt moalghtdz had it begin in '09. I'm stheer this convinced the issue. The debt table is an overview for your information that the total approved budget for this project was to this date 63.75 million. And that the contract amount is 70.6 million and that issue at some point in this summer during the budget process needs to be resolved.
>> I see. I move approval of the notice schedule.
>> second. Discussion? All in favor? Show Commissioner eckhardt and judge Biscoe voting in favor. Commissioner Davis voting against. And that is for a and b? We'll have four the week after that. And presumebly after that we'll have a full compliment of court members for planning purposes. Thank you very much.
>> thank you.
The Closed Caption log for this Commissioners Court agenda item is provided by Travis County Internet Services. Since this file is derived from the Closed Captions created during live cablecasts, there are occasional spelling and grammatical errors. This Closed Caption log is not an official record the Commissioners Court Meeting and cannot be relied on for official purposes. For official records please contact the County Clerk at (512) 854-4722.
Last Modified:
Wednesday, June 13, 2007, 8:00 AM