HomeMy WebLinkAbout2011 02 14 Informational 104 Update on Funding for Phase I of the Reclaimed Water System COMMISSION AGENDA
CONSENT
INFORMATIONAL X
ITEM 104 PUBLIC HEARING
REGULAR
1 6,%'
February 14, 2011 MGR /DEPT
Meeting A thorization
REQUEST: Finance Department providing an update on funding for Phase I of the $4.2
million expansion of the Reclaimed Water System.
SYNOPSIS:
On August 23, 2010 the City Commission approved construction on a $4.2 million expansion of
the Winter Springs Reclaimed Water Infrastructure (Phase I) with the understanding that initial
funding would be provided from the Water and Sewer Fund Reserve until such time that a
commercial loan was secured.
CONSIDERATIONS:
Reclaimed water use is a growing practice and Florida currently leads the nation in using
reclaimed water generated by domestic wastewater treatment facilities (663 million gallons per
day in 2007). By the year 2010, the official State goal is to reclaim one billion gallons of
wastewater per day. Using reclaimed water has many advantages including (i) reduced demand
for surface and ground water, (ii) reduction or elimination of wastewater discharges which can
pollute surface water, (iii) recharge of ground water, and (iv) reduction in investment for
developing new water supplies. Using reclaimed water offers an environmentally sound means
of both wastewater and water resource management in Florida. Reclaimed water use not only
reduces environmental impacts due to discharge of wastewater to surface waters, but also helps
conserve potable water supplies by providing an alternative affordable water to meet irrigation,
commercial, and industrial needs. In addition, many water -use land application activities (golf
course, agricultural, and residential irrigation; groundwater recharge, etc.) ultimately return water
to ground water, especially in north and central Florida (Gurpal S. Toor and Donald P. Rainey).
Winter Springs has been producing and selling reclaimed water since 1996 to a limited number
of customers. Currently, the City is selling 100% of its supply during the summer dry months but
not without challenges; usage of reclaimed water during the day and evening hours fluctuates
greatly making supply demands very difficult to predict. There are areas in the City where
storage and line pressure are becoming a concern. When pressure in the line is not adequate,
irrigation is not effective which is one reason additional infrastructure upgrades are required at
this time. A second compelling reason to proceed with this project is related to the St. Johns
River Water Management District grant awarded to the City. The grant pays 30% of the
reclaimed water augmentation construction costs up to $1,280,000. The $4.2M the City would
need to spend to maximize the grant is required to be completed by April 2012. It is anticipated
that the Oak Forest Pumping and Storage and Lake Jesup augmentation facility will cost in the
$4,200,000 range.
In the interim, approximately $1,200,000 net need for this project is proposed to be funded from
available resources, which is approximately $4.8 as of September 30, 2010. This will not violate
the City's fiscal policy which requires 25% reserves or approximately $2,100,000 to remain in
the Utility Enterprise Fund.
Phase I
Phase I of the project is needed to provide reclaimed water storage and pumping for the Lake
Jesup Reclaimed Water Augmentation project. It consists of a three- million gallon pre- stressed
concrete tank, electrical control building, and three high - service pumps. The site design allows
for a future three million gallon storage tank and two additional high - service pumps. Upon
completion, this facility can be put into service immediately as it is not dependent upon the
augmentation facility to be constructed at Central Wiras Park. Water Pumping and Storage
Improvements began in November 2010 with Beach Construction of Gainesville winning the
award of $1,562,000.
Phase II
This phase of the project is primarily the expansion of distribution lines to service areas of the
City that currently do not have reclaimed water available. Phase II is not expected to begin in the
near future; preliminary review indicates the 2008 rates will not be sufficient to support the
phase II expansion at this time. This concern will be discussed in detail at a future Commission
meeting.
In an attempt to minimize the cost of financing this project the City contracted with Public
Resources Management Group, Inc. to review the 2008 rate study and issue a letter of
reaffirmation stating current rates will support the proposed financing for phase I of the
Reclaimed Expansion Project. The review of the rate study is nearing completion and has
determined that our preliminary debt service coverage ratio is approximately 1.30% (parity debt
requirements are 1.10 %). The next step in obtaining financing is to determine the optimal
financing structure and identify lenders that may be interested in investing in the project.
The City has engaged PFM (Public Finance Management) to seek out and secure the most
efficient commercial borrowing instrument available. This will be facilitated by a competitive
bid process to lending institutions that are interested in providing long -term debt financing. The
current recommendation for structuring the financing is a "wrapped structure" (attached) which
assumes a $3.45 million project fund and 20 -year bank loan. Simply stated "wrap structure"
means a loan that when added to the existing debt structure (with varying maturities) will
produce level payments over the next 20 years.
FISCAL IMPACT:
The Water and Sewer Fund will self fund approximately $1,100,000 of the Reclaimed Project for
2 months from its cash on hand. This interim financing will be reimbursed from the loan
proceeds back to the Water and Sewer Fund once available (Early April).
COMMUNICATION EFFORTS:
This Agenda Item has been forwarded to the Mayor and City Commission; City Manager; City
Attorney /Staff; placed in Press Packets; placed in the City Hall (Lobby) City Commission
Meeting binder; and will be available on the City's Website, LaserFiche, and the City's Server.
Additionally, information related to this Agenda Item has been sent to media/press
representatives who have requested Agendas /Agenda Item information, all Homeowner's
Associations on file with the City, all individuals who have requested Agendas /Agenda Item
information, Department Directors; and also posted outside City Hall; posted inside City Hall
with additional copies available for the general public; and posted at five (5) different locations
around the City.
RECOMMENDATION:
It is recommended that the City Commission receive this finance update on the Lake Jesup
Reclaimed Project.
ATTACHMENTS:
PFM loan analysis
TABLE OF CONTENTS
City of Winter Springs, Florida
Utility System Revenue Bonds, Series 2010
Bank Loan
20 Year Term (24 months int only)
(Wrapped Structure)
Report Page
Sources and Uses of Funds 1
Bond Summary Statistics 2
Bond Pricing 3
Bond Debt Service 4
Aggregate Debt Service 6
Net Debt Service 7
Project Fund 8
Sep 10, 2010 12:41 pm Prepared by DBC Finance (Finance 6.017 Winter Springs:WATRSEWR -2010)
SOURCES AND USES OF FUNDS
City of Winter Springs, Florida
Utility System Revenue Bonds, Series 2010
Bank Loan
20 Year Term (24 months int only)
(Wrapped Structure)
Sources:
Bond Proceeds:
Par Amount 3,827,625.00
3,827,625.00
Uses:
Project Fund Deposits:
Deposit to Project Fund 3,450,666.69
Other Fund Deposits:
DSRF 351,957.45
Delivery Date Expenses:
Cost of Issuance 25,000.00
Other Uses of Funds:
Additional Proceeds 0.86
3,827,625.00
Sep 10, 2010 12:41 pm Prepared by DBC Finance (Finance 6.017 Winter Springs:WATRSEWR -2010) Page 1
BOND SUMMARY STATISTICS
City of Winter Springs, Florida
Utility System Revenue Bonds, Series 2010
Bank Loan
20 Year Term (24 months int only)
(Wrapped Structure)
Dated Date 10/01/2010
Delivery Date 10/01/2010
First Coupon 04/01/2011
Last Maturity 10/01/2030
Arbitrage Yield 4.085477%
True Interest Cost (TIC) 4.292613%
Net Interest Cost (NIC) 4.435274%
All -In TIC 4.262607%
Average Coupon 4.435274%
Average Life (years) 10.625
Duration of Issue (years) 8.495
Par Amount 3,827,625.00
Bond Proceeds 3,827,625.00
Total Interest 1,803,694.14
Net Interest 1,803,694.14
Total Debt Service 5,631,319.14
Maximum Annual Debt Service 365,589.56
Average Annual Debt Service 281,565.96
Underwriter's Fees (per $1000)
Average Takedown
Other Fee
Total Underwriter's Discount
Bid Price 100.000000
Par Average Average PV of 1 bp
Bond Component Value Price Coupon Life change
Serial Bonds 3,827,625.00 100.000 4.435% 10.625 2,909.00
3,827,625.00 10.625 2,909.00
All -In Arbitrage
TIC TIC Yield
Par Value 3,827,625.00 3,827,625.00 3,827,625.00
+ Accrued Interest
+ Premium (Discount)
- Underwriter's Discount
- Cost of Issuance Expense - 25,000.00
- Other Amounts
Target Value 3,827,625.00 3,802,625.00 3,827,625.00
Target Date 10/01/2010 10/01/2010 10/01/2010
Yield 4.292613% 4.262607% 4.085477%
Sep 10, 2010 12:41 pm Prepared by DBC Finance (Finance 6.017 Winter Springs:WATRSEWR -2010) Page 2
BOND PRICING
City of Winter Springs, Florida
Utility System Revenue Bonds, Series 2010
Bank Loan
20 Year Term (24 months int only)
(Wrapped Structure)
Maturity
Bond Component Date Amount Rate Yield Price
Serial Bonds:
10/01/2030 3,827,625 4.232% 100.000 C
3,827,625
Dated Date 10/01/2010
Delivery Date 10/01/2010
First Coupon 04/01/2011
Par Amount 3,827,625.00
Original Issue Discount
Production 3,827,625.00 100.000000%
Underwriter's Discount
Purchase Price 3,827,625.00 100.000000%
Accrued Interest
Net Proceeds 3,827,625.00
Sep 10, 2010 12:41 pm Prepared by DBC Finance (Finance 6.017 Winter Springs:WATRSEWR -2010) Page 3
BOND DEBT SERVICE
City of Winter Springs, Florida
Utility System Revenue Bonds, Series 2010
Bank Loan
20 Year Term (24 months int only)
(Wrapped Structure)
Period Bond Total
Ending Principal Interest Debt Service Balance Bond Value
10/01/2011 76,552.50 76,552.50 3,827,625 3,827,625
10/01/2012 283,767 76,552.50 360,319.50 3,543,858 3,543,858
10/01/2013 179,604 177,192.90 356,796.90 3,364,254 3,364,254
10/01/2014 188,724 168,212.70 356,936.70 3,175,530 3,175,530
10/01/2015 204,459 158,776.50 363,235.50 2,971,071 2,971,071
10/01/2016 217,036 148,553.56 365,589.56 2,754,035 2,754,035
10/01/2017 218,245 137,701.76 355,946.76 2,535,790 2,535,790
10/01/2018 237,320 126,789.50 364,109.50 2,298,470 2,298,470
10/01/2019 245,935 114,923.50 360,858.50 2,052,535 2,052,535
10/01/2020 259,007 102,626.76 361,633.76 1,793,528 1,793,528
10/01/2021 192,783 89,676.40 282,459.40 1,600,745 1,600,745
10/01/2022 145,172 80,037.26 225,209.26 1,455,573 1,455,573
10/01/2023 152,430 72,778.66 225,208.66 1,303,143 1,303,143
10/01/2024 160,052 65,157.16 225,209.16 1,143,091 1,143,091
10/01/2025 168,054 57,154.56 225,208.56 975,037 975,037
10/01/2026 176,457 48,751.86 225,208.86 798,580 798,580
10/01/2027 185,280 39,929.00 225,209.00 613,300 613,300
10/01/2028 194,544 30,665.00 225,209.00 418,756 418,756
10/01/2029 204,271 20,937.80 225,208.80 214,485 214,485
10/01/2030 214,485 10,724.26 225,209.26
3,827,625 1,803,694.14 5,631,319.14
Sep 10, 2010 12:41 pm Prepared by DBC Finance (Finance 6.017 Winter Springs:WATRSEWR -2010) Page 4
BOND DEBT SERVICE
City of Winter Springs, Florida
Utility System Revenue Bonds, Series 2010
Bank Loan
20 Year Term (24 months int only)
(Wrapped Structure)
Period Annual Bond Total
Ending Principal Interest Debt Service Debt Service Balance Bond Value
10/01/2010 3,827,625 3,827,625
04/01/2011 38,276.25 38,276.25 3,827,625 3,827,625
10/01/2011 38,276.25 38,276.25 76,552.50 3,827,625 3,827,625
04/01/2012 38,276.25 38,276.25 3,827,625 3,827,625
10/01/2012 283,767 38,276.25 322,043.25 360,319.50 3,543,858 3,543,858
04/01/2013 88,596.45 88,596.45 3,543,858 3,543,858
10/01/2013 179,604 88,596.45 268,200.45 356,796.90 3,364,254 3,364,254
04/01/2014 84,106.35 84,106.35 3,364,254 3,364,254
10/01/2014 188,724 84,106.35 272,830.35 356,936.70 3,175,530 3,175,530
04/01/2015 79,388.25 79,388.25 3,175,530 3,175,530
10/01/2015 204,459 79,388.25 283,847.25 363,235.50 2,971,071 2,971,071
04/01/2016 74,276.78 74,276.78 2,971,071 2,971,071
10/01/2016 217,036 74,276.78 291,312.78 365,589.56 2,754,035 2,754,035
04/01/2017 68,850.88 68,850.88 2,754,035 2,754,035
10/01/2017 218,245 68,850.88 287,095.88 355,946.76 2,535,790 2,535,790
04/01/2018 63,394.75 63,394.75 2,535,790 2,535,790
10/01/2018 237,320 63,394.75 300,714.75 364,109.50 2,298,470 2,298,470
04/01/2019 57,461.75 57,461.75 2,298,470 2,298,470
10/01/2019 245,935 57,461.75 303,396.75 360,858.50 2,052,535 2,052,535
04/01/2020 51,313.38 51,313.38 2,052,535 2,052,535
10/01/2020 259,007 51,313.38 310,320.38 361,633.76 1,793,528 1,793,528
04/01/2021 44,838.20 44,838.20 1,793,528 1,793,528
10/01/2021 192,783 44,838.20 237,621.20 282,459.40 1,600,745 1,600,745
04/01/2022 40,018.63 40,018.63 1,600,745 1,600,745
10/01/2022 145,172 40,018.63 185,190.63 225,209.26 1,455,573 1,455,573
04/01/2023 36,389.33 36,389.33 1,455,573 1,455,573
10/01/2023 152,430 36,389.33 188,819.33 225,208.66 1,303,143 1,303,143
04/01/2024 32,578.58 32,578.58 1,303,143 1,303,143
10/01/2024 160,052 32,578.58 192,630.58 225,209.16 1,143,091 1,143,091
04/01/2025 28,577.28 28,577.28 1,143,091 1,143,091
10/01/2025 168,054 28,577.28 196,631.28 225,208.56 975,037 975,037
04/01/2026 24,375.93 24,375.93 975,037 975,037
10/01/2026 176,457 24,375.93 200,832.93 225,208.86 798,580 798,580
04/01/2027 19,964.50 19,964.50 798,580 798,580
10/01/2027 185,280 19,964.50 205,244.50 225,209.00 613,300 613,300
04/01/2028 15,332.50 15,332.50 613,300 613,300
10/01/2028 194,544 15,332.50 209,876.50 225,209.00 418,756 418,756
04/01/2029 10,468.90 10,468.90 418,756 418,756
10/01/2029 204,271 10,468.90 214,739.90 225,208.80 214,485 214,485
04/01/2030 5,362.13 5,362.13 214,485 214,485
10/01/2030 214,485 5,362.13 219,847.13 225,209.26
3,827,625 1,803,694.14 5,631,319.14 5,631,319.14
Sep 10, 2010 12:41 pm Prepared by DBC Finance (Finance 6.017 Winter Springs:WATRSEWR -2010) Page 5
AGGREGATE DEBT SERVICE
City of Winter Springs, Florida
Utility System Revenue Bonds, Series 2010
Bank Loan
20 Year Term (24 months int only)
(Wrapped Structure)
$3.45 MM Bank
Period Loan; 20 Aggregate
Ending years; wrap Series 2000 Series 2001 Series 2002 Debt Service
10/01/2011 76,552.50 220,202.50 467,395.00 1,148,048.75 1,912,198.75
10/01/2012 360,319.50 211,702.50 480,295.00 1,151,017.50 2,203,334.50
10/01/2013 356,796.90 218,387.50 476,645.00 1,151,505.00 2,203,334.40
10/01/2014 356,936.70 224,562.50 472,307.50 1,149,527.50 2,203,334.20
10/01/2015 363,235.50 215,100.00 482,267.50 1,142,731.25 2,203,334.25
10/01/2016 365,589.56 220,900.00 475,707.50 1,141,137.50 2,203,334.56
10/01/2017 355,946.76 220,950.00 478,312.50 1,148,125.00 2,203,334.26
10/01/2018 364,109.50 220,725.00 474,750.00 1,143,750.00 2,203,334.50
10/01/2019 360,858.50 220,225.00 480,250.00 1,142,000.00 2,203,333.50
10/01/2020 361,633.76 224,450.00 479,500.00 1,137,750.00 2,203,333.76
10/01/2021 282,459.40 1,443,125.00 477,750.00 2,203,334.40
10/01/2022 225,209.26 1,978,125.00 2,203,334.26
10/01/2023 225,208.66 1,978,125.00 2,203,333.66
10/01/2024 225,209.16 1,978,125.00 2,203,334.16
10/01/2025 225,208.56 1,978,125.00 2,203,333.56
10/01/2026 225,208.86 1,978,125.00 2,203,333.86
10/01/2027 225,209.00 1,978,125.00 2,203,334.00
10/01/2028 225,209.00 1,978,125.00 2,203,334.00
10/01/2029 225,208.80 1,978,125.00 2,203,333.80
10/01/2030 225,209.26 1,978,125.00 2,203,334.26
5,631,319.14 21,443,455.00 5,245,180.00 11,455,592.50 43,775,546.64
Sep 10, 2010 12:41 pm Prepared by DBC Finance (Finance 6.017 Winter Springs:WATRSEWR -2010) Page 6
NET DEBT SERVICE
City of Winter Springs, Florida
Utility System Revenue Bonds, Series 2010
Bank Loan
20 Year Term (24 months int only)
(Wrapped Structure)
Period Total Interest Net
Ending Debt Service Adjustment DSRF Debt Service
10/01/2011 76,552.50 - 24,034.86 14,379.14 38,138.50
10/01/2012 360,319.50 - 12,017.43 14,379.14 333,922.93
10/01/2013 356,796.90 14,379.14 342,417.76
10/01/2014 356,936.70 14,379.14 342,557.56
10/01/2015 363,235.50 14,379.14 348,856.36
10/01/2016 365,589.56 14,379.14 351,210.42
10/01/2017 355,946.76 14,379.14 341,567.62
10/01/2018 364,109.50 14,379.14 349,730.36
10/01/2019 360,858.50 14,379.14 346,479.36
10/01/2020 361,633.76 14,379.14 347,254.62
10/01/2021 282,459.40 14,379.14 268,080.26
10/01/2022 225,209.26 14,379.14 210,830.12
10/01/2023 225,208.66 14,379.14 210,829.52
10/01/2024 225,209.16 14,379.14 210,830.02
10/01/2025 225,208.56 14,379.14 210,829.42
10/01/2026 225,208.86 14,379.14 210,829.72
10/01/2027 225,209.00 14,379.14 210,829.86
10/01/2028 225,209.00 14,379.14 210,829.86
10/01/2029 225,208.80 14,379.14 210,829.66
10/01/2030 225,209.26 366,336.59 - 141,127.33
5,631,319.14 - 36,052.29 639,540.25 4,955,726.60
Sep 10, 2010 12:41 pm Prepared by DBC Finance (Finance 6.017 Winter Springs:WATRSEWR -2010) Page 7
PROJECT FUND
City of Winter Springs, Florida
Utility System Revenue Bonds, Series 2010
Bank Loan
20 Year Term (24 months int only)
(Wrapped Structure)
Deposit to Project Fund (PROJECT)
Scheduled
Date Deposit Interest Principal Draws Balance
10/01/2010 3,450,666.69 215,666.67 215,666.67 3,235,000.02
11/01/2010 215,666.67 215,666.67 3,019,333.35
12/01/2010 215,666.67 215,666.67 2,803,666.68
01/01/2011 21,566.67 21,566.67 2,782,100.01
02/01/2011 215,666.67 215,666.67 2,566,433.34
03/01/2011 431,333.33 431,333.33 2,135,100.01
04/01/2011 388,200.00 388,200.00 1,746,900.01
05/01/2011 647,000.00 647,000.00 1,099,900.01
06/01/2011 431,333.33 431,333.33 668,566.68
08/01/2011 215,666.67 215,666.67 452,900.01
09/01/2011 215,666.67 215,666.67 237,233.34
10/01/2011 21,566.67 21,566.67 215,666.67
11/01/2011 215,666.67 215,666.67
3,450,666.69 0 3,450,666.69 3,450,666.69
Arbitrage Yield: 4.0854767%
Value of Negative Arbitrage: 71,913.87
Sep 10, 2010 12:41 pm Prepared by DBC Finance (Finance 6.017 Winter Springs:WATRSEWR -2010) Page 8