Travis County Commissioners Court

March 6, 2012 (Agenda)
Item 16

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Number 16, consider and take appropriate action on requested debt issuance schedule and funding for fiscal year 2012 capital projects.
we're not waiting on somebody else for this item, right?

>>

>> [inaudible] was going to come at 10:00 in case you had any questions, but that's up to the Commissioners court.

>> if we have questions for him, we'll make arrangements to accommodate him.

>> jessica rio, planning and budget.
item number 16 is the f.y.
12 proposed debt issuance.
the reason we bring this forward today is that in order to issue certificates of obligation bond counsel will need to post by March 20th.
I'm going through the memo dated February 29 from p.b.o.
to court and I do need to note one change on the 2000 voter approved bonds.
the request of cash flow -- let me back up.
the authorization was $2 million from the voters.
requested cash flow 1.5 million.
however, all letter approved bonds have to absorb their own costs so this needs to be corrected to 1,515,000.
for 2011 voter approved bonds, this is the issuance schedule published in the brochure.
prop 1 being roads, drainage, bridge and bike and pedestrian projects.
prop 2, parks and land conservation, 32 for a total of 52.46 million.
the total would be changed as far as bonds for state highway pass-through this is the first time we're doing that.
that total is 3.5 million and that we worked out with the transportation natural resources department to make sure that we had sufficient funding for this fiscal year as well as a little bit of extra in the event that it's needed with the space.
there's no questions on the pass-through or voter approved I'm going to the -- certificate of obligation proposed at 32.79 million.
however, you'll see that the revised recommendation a little lower than that for a couple of reasons.
we did reduce the be fit number to the appropriate amount for the overall project of 660125.
that completes the issuance for this project.
and it does not change the overall budget.
the number that was in the adopted budget was in error.
the other thing that we have proposed here is to reduce one tso project and we did work closely with tcso on this to more appropriately issue when the funds were needed.
so they need 250,000 this year.
we're recommending that that move forward and the remainder be included in the preliminary budget for next year.
the other bullet point here is we reduced the c.o.
by 882,000.
that is in direct relation to the actions by the Commissioners court that were taken on February 28th.
with the use of existing allocated reserves of -- excuse me, existing c.o.s.
then we just adjusted is issuance costs and that was after discussions with the financial add vidor lad pass-through tillly.
if you look at the last page I tried to give you the adopted number and the reviled number with the total for the co-s being 289,150,000.
being -- 29,150,000.

>> can you remind me what that is for the sheriff's office?
two and a half million.
is that hvac system?

>> that is part of the improvements at the Travis County jail.
it's part of a overall three-year project and it's the central -- it's ductwork basically.

>> okay.

>> and the total for that ductwork is 2.5, so we're just doing it in chunks?

>> they need to do the engineering work first and so this will appropriately fund them for the engineering work to move forward with with the project next year.

>> similarly we're just reducing the amount we need this year.
the whole be fit project is not 6.6 million.

>> the whole project was 24 million or -- I have the number.
I think in the memo, actually.
the entire project is 24,301,525 and I believe that 7055730 was an error -- an erroneous recommendation in the preliminary budget.
just a scrivener's error.

>> do we have to do any thing special on the debt for fast

>> [inaudible] financing?

>> I have asked that question of bond counsel.
he said he believed I already asked that question and he was going to triple check.
I think we're okay, but I will -- he was out of town until today.
I will make sure we with know the answer prior to March 20th when I know we need to proceed with the notice of intent to issue certificates of obligation.

>> okay.
nrs thank you.
thank you.
any other questions, court members?

>> judge, I just want to thank staff for what they are doing and I kind of wanted to break down just in case any of my residents out in precinct 1 call me and ask me what is the amount of issuance as far as what we're dealing with in precinct 1.
and, of course, they have it broken down very thoroughly for me and there was some sheriff's office projects that I couldn't get the -- share it projects, maybe between 1 and 4.
some other precinct.
but you did an outstanding job a breaking down the numbers as far as the numbers that I can share with my residents on those particular projects in this particular presentation that is specifically just for precinct 1 because we have been trying to keep everyone posted as far as what's going on over there.
so I want to thank you all for breaking those numbers down for us.

>> and I will thank the transportation and resources department.
I just talked to steve.
on that work sheet it loose like the fm 1626 has the wrong precinct.
I'm going to get that corrected and then I'll send the entire information to the Commissioners court so you each have the same work sheet that includes all the t.n.r.
projects broken down by precinct for you.

>> I appreciate that.

>> any other questions or comments?
dr. Kim, we'll need you on the mic there.
this is item number 16.

>> thank you.
I provided all the documentations through the county -- county -- no.
supervision, county supervision and county supervision department over there.
I provided all the documentation.
I requested 2,000 and 2001 project over county supervision and this court approved me to get the information 2000, 2001.
I

>> [indiscernible] the lady told me -- I did not receive it yet.
the lady told me last week she provide but probably this week.
I didn't receive it.
I requested more.
the other is 2002 and the discharge, but the Travis County Commissioner county community paper said 2007.
that is fraud.
so I need all 2000, 2001, 2, 3, 4, 5 why Travis County community supervision paper said expiration date 2007.
I need that information, the documentation.
actual the release was February 2, February 8, 2002.
but Travis County community supervision paper wrote down 2008.
so it's a fraud.
I need it to prove all the information 2000, 2001 through 2007.
why it should be 2007.
it came from Travis County community supervision department.
I have all documentation I provided to the court, the person up there.
thank you very much.

>> thank you.

>> there's a couple of pending items, at least one that I need to mention is that there's a proposal for eob renovation that really is not fully cooked at this point.
I just wanted to mention that it is out there.
with the current schedule that we have that lad patillo has furnished you, we'll start working on that this Thursday.
I would assume any pending items that you have that perhaps would be capital could be incorporated into a potential refunding of some of the outstanding debt that we're looking at currently which would happen sometime in late July or August time frame.
so there are a couple of things out there that our recommendation to you is to move forward with this list and go ahead and approve it.
we do have scheduled the credit rating flexes dallas to s and p and moody's on April 25th.
we're on a tight schedule within a four week.

>> you received an email from me what the current interest rates on in the market, the interest rates.
20-year are two and a half percent and five year average rates are below one percent at .7.
it is a good time to move forward.
I'd be happy to answer any questions.

>> the projects listed on the last page of the memo are expected to be 20-year debt?

>> currently no.
these projects are short-term c.o.s, all five years.
unless the court makes exception we move forward with five-year c.o.s.
there are projects such as the 700 lavaca that are appropriate for 20-year if the court so desired.
and the f.y.
12 with tax settlement at 2.6.

>> but the recommendation is five-year debt?

>> the recommendation is five-year debt.
that's been the model presented to you.
and it's .7 percent.
that would be our recommendation, however, we're hoping --

>> the interest rate is very low no matter which way you cut it.
refresh my memory with regard to our policies regarding how we -- how we categorize projects.
for instance, 700 lavaca is a project designed to serve the residents of Travis County for the next 50 to 60 years.
so it's -- from a philosophical standpoint it's appropriate to bore borrow money to do it so the cost isn't born entirely by current residents of Travis County since it will be benefiting future residents of Travis County.
do we make any distinction in policy for the types of project or do we just as a default move to five-year c.o.s.

>> the defuture has been five years.
however, -- default.
however, in the last several years the court has segmented out projects such as the 700 lavaca project or mainly building purchases, land purchases and moved those into 20-year crol h.
c.o.s and that's something we can do.

>> since the interest rates are so low even at five years, your financial recommendation is stick with with the five year?

>> I don't see any reason not to stick with with the five year; however, like I said, we are open to looking at the 20-year for 700 lavaca and the loop one project in particular.

>> will we be able to see how the annual debt payment is impacted after the issuance of this debt?

>> I am going to be working on a new debt model.
I'm currently trying to work to extend the debt model out an additional five years so I'm in the process of doing that.
one thing to note on the current -- one of the questions that was asked and I presented this in the email, the current 20-year average debt is debt service of approximately 64,000 per year as opposed to the five year average debt per million is 204,000.
after five years you've paid it off and moved forward so that also gives you a little bit of a comparison what the difference is you are paying each year.
the 64,000 obviously would be for 20 years and then the 204,000 for the five years.
so you are paying less interest overall.
and I actually ran that.
the interest payment -- the average interest payment for that 20-year debt, our calculations are higher, we use a little higher interest rate, but the average payments for the five year versus the 20 year you are paying on average not quite twice as much interest each year.
I can get all that for you and if y'all would like to look at the 20-year option next week, we have the time to do that.

>> I guess I'm not interested in seeing the 20-year option, but I am interested in seeing what the annual payment would be.

>> okay.

>> if we -- if we basically stacked this new issuance on top of current annual payment, yeah.

>> I guess to off set that, though, hopefully I know we've still got debt that we're paying off as we go through this process.

>> yes.

>> and I guess my concern is making a compare, if we were to look and project the debt that would be paid off in this same time frame maybe if there would be an off set.

>> and we are paying off that -- just to be clear, we have because of the 2011 voter approved bond and the 2005, we have been adding on more debt, if you will, than paying off debt, but what might be useful is I had sent a presentation I guess back before the bond -- the bond election and I can refresh that and give you a current debt model as well.

>> that would be good.

>> so when do you need us to act on this?

>> as far as the c.o.s, we would need by next week.

>> okay.
and you are preparing a document, you say?

>> I can prepare a current debt -- I can certainly prepare the information given to you last fall and give that to you today.
I can work on preparing a current debt model with the current assumptions this week.
by Friday.

>> what else do we need to approve next week?

>> the only -- if you were ready to move forward today, the only thing would be if you wanted to move any of that debt to 20 year.

>> and lad is here.
he could comment on those two items under discussion about five year versus 20-year debt.

>> talking about with what the difference if we were to do this on five year versus 20 year.

>> I'm sure jessica has already covered it, lengthen your average maturity a small amount, but I think it will be negligible.
our philosophy has always been to pay -- pardon me, your philosophy has been to pay for --

>> it's been ours.

>> our philosophy has always been to make sure that the amortization is over the useful life of the assets and not go beyond the useful life of the assets.

>> which but still that would be in line for the two projects that we're considering.
those are very long lives, long lived.
how would you say that?
anyway, long time utility projects.

>> right.

>> those are long.
but the question I have is we're looking at probably, you know, more long-term projects in the near future as well.
so how does -- does it make a difference as far as retiring this one in five years and not ending up with loading up with long-term?

>> I think with the total amount of outstanding debt you have and the rapid payoff which is a little over eight years that it would have a negligible effect on it.
I've heard because of low rates there are other issuers out there issuing 30 and 40-year bond.
I wouldn't recommend that.
even if you can get the long-term financing at low rates, it just extends your average payoff.
and I think that's one of the things that the rating agencies have always pointed out is your rapid principal payoff is very positive.

>> I don't have any interest in throwing additional on 20.
but I think whatever we need to act on between now and next Tuesday, let's have it and I'd rather account on all of it at one time.
if we have it all.
the pass-through financing, this is the first time we've done it.
whatever hoops we need to jump between now and Monday at 5:00, let's do it so on Tuesday we can go ahead and take comfort in whatever action we're taking.

>> and just to be real clear, the only thing I would do is dust off the presentation that I provided the court last fall and provide you a new debt model with the numbers that we're discussing today.
there really wouldn't be any other change other than the one I mentioned from the table here which is adding 15,000 to the 2000 voter approved debt in order to take care of some issuance costs.
you wouldn't see anything different on the projects.

>> and we can get your projected debt service number that you had mentioned, judge, as compared to the current debt service.
the numbers that lad gave us this week for the 20 and five year debt are below I believe what we have in the debt service model.

>> much more competitive.

>> substantially.

>> the interest rates right now are extremely low.

>> I'd rather act on all of it.

>> okay.
we can bring it back next week for action.

>> okay.
anything else?
we'll have it back on the agenda next week.

>> thank you.

>> for final action.
and that's March 13th.

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