TABLE10 - WATERWORKS ANDSEWERSYSTEMREVENUEBONDREQUIREMENTS(1)
FYE Outstanding Previously Issued Parity Bonds Refunded The Bonds Total Debt Service % of Principal
9/30 Principal Interest Total Debt Service Principal Interest Total Principal Interest Total Retired
2015 $ 94,545,000 $ 84,133,976 $ 178,678,976 $ (325,067) $ - $ - $ - $ 94,545,000 $ 83,808,909 $ 178,353,909
2016 93,825,000 80,399,153 174,224,153 (19,503,994) 2,850,000 25,290,162 28,140,162 96,675,000 86,185,321 182,860,321 2017 95,365,000 76,534,931 171,899,931 (19,503,994) 3,085,000 24,783,961 27,868,961 98,450,000 81,814,898 180,264,898 2018 89,370,000 72,818,639 162,188,639 (19,503,994) 3,245,000 24,625,711 27,870,711 92,615,000 77,940,356 170,555,356
2019 94,540,000 68,853,085 163,393,085 (19,503,994) 3,410,000 24,459,336 27,869,336 97,950,000 73,808,427 171,758,427 22.8%
2020 98,860,000 64,567,912 163,427,912 (35,446,819) 16,070,000 24,162,108 40,232,108 98,610,000 69,603,201 168,213,201 2021 98,155,000 60,261,524 158,416,524 (64,065,831) 45,460,000 23,395,205 68,855,205 97,245,000 65,960,898 163,205,898 2022 96,725,000 55,976,950 152,701,950 (60,149,294) 49,760,000 22,172,153 71,932,153 101,965,000 62,519,809 164,484,809 2023 91,385,000 51,785,732 143,170,732 (50,578,038) 41,455,000 20,908,545 62,363,545 96,080,000 58,876,239 154,956,239
2024 80,855,000 47,836,913 128,691,913 (47,440,594) 39,765,000 19,466,333 59,231,333 85,375,000 55,107,652 140,482,652 45.6%
2025 72,000,000 44,439,805 116,439,805 (47,423,619) 41,640,000 17,578,600 59,218,600 76,725,000 51,509,787 128,234,787 2026 60,680,000 41,640,917 102,320,917 (37,787,541) 33,890,000 15,690,350 49,580,350 65,755,000 48,358,727 114,113,727 2027 63,290,000 39,005,408 102,295,408 (37,769,488) 35,610,000 13,952,850 49,562,850 68,715,000 45,373,771 114,088,771 2028 66,060,000 36,222,337 102,282,337 (26,142,263) 25,510,000 12,424,850 37,934,850 71,815,000 42,259,924 114,074,924
2029 69,088,000 33,193,810 102,281,810 (16,783,663) 17,220,000 11,356,600 28,576,600 75,163,000 38,911,747 114,074,747 62.6%
2030 63,905,000 30,050,841 93,955,841 (11,787,750) 12,980,000 10,601,600 23,581,600 70,305,000 35,444,691 105,749,691 2031 52,015,000 27,311,441 79,326,441 (11,790,250) 13,650,000 9,935,850 23,585,850 58,745,000 32,377,041 91,122,041 2032 54,480,000 24,851,655 79,331,655 (11,790,375) 14,350,000 9,235,850 23,585,850 61,555,000 29,572,130 91,127,130 2033 57,630,000 22,235,034 79,865,034 (23,901,750) 27,505,000 8,189,475 35,694,475 65,065,000 26,592,759 91,657,759
2034 60,465,000 19,395,381 79,860,381 (23,902,500) 28,770,000 6,926,450 35,696,450 68,135,000 23,519,331 91,654,331 77.9%
2035 63,515,000 16,351,303 79,866,303 (23,900,500) 29,940,000 5,752,250 35,692,250 71,275,000 20,383,053 91,658,053 2036 66,710,000 13,153,653 79,863,653 (23,903,000) 31,165,000 4,530,150 35,695,150 74,555,000 17,100,803 91,655,803
2037 54,895,000 10,174,144 65,069,144 - 8,105,000 3,744,750 11,849,750 63,000,000 13,918,894 76,918,894
2038 45,380,000 7,701,288 53,081,288 - 8,435,000 3,413,950 11,848,950 53,815,000 11,115,238 64,930,238
2039 37,375,000 5,638,647 43,013,647 - 8,780,000 3,069,650 11,849,650 46,155,000 8,708,297 54,863,297 92.6%
2040 39,285,000 3,728,700 43,013,700 - 9,135,000 2,711,350 11,846,350 48,420,000 6,440,050 54,860,050
2041 26,610,000 2,088,216 28,698,216 - 9,510,000 2,338,450 11,848,450 36,120,000 4,426,666 40,546,666
2042 18,580,000 962,000 19,542,000 - 9,950,000 1,899,500 11,849,500 28,530,000 2,861,500 31,391,500
2043 9,950,000 248,750 10,198,750 - 10,460,000 1,389,250 11,849,250 20,410,000 1,638,000 22,048,000
2044 - - - - 10,995,000 852,875 11,847,875 10,995,000 852,875 11,847,875 99.5%
2045 - - - - 11,560,000 289,000 11,849,000 11,560,000 289,000 11,849,000 100.0%
1,915,538,000
$ $1,041,562,146 $2,957,100,146 $(632,904,314) $604,260,000 $355,147,164 $959,407,164 $2,106,323,000 $1,177,279,994 $3,283,602,994
(1) Numbers may not sum due to rounding.
OUTSTANDINGREVENUEBONDS... All of the City's Waterworks and Sewer System Revenue Bonds (“Revenue Bonds”) currently outstanding and payable from “Pledged Revenues” of the System result from Revenue Bond issues commencing with the City's Waterworks and Sewer System Revenue Refunding Bonds, Series 1981 (the “Series 1981 Bonds”). The City thereafter has issued various series of Revenue Bonds on a parity with the Series 1981 Bonds, in accordance with the terms of the ordinance that authorized the issuance of the Series 1981 Bonds (the “Underlying Ordinance”). See Appendix B – “Selected Provisions of the Bond Ordinance – Definitions – Previously Issued Parity Bonds” for a general description of the Revenue Bonds currently outstanding that were issued on a parity under the terms of the Underlying Ordinance.
REVENUEBONDCOVERAGE... Authorizing City ordinance under which all Revenue Bonds are issued require a level of Net Revenues for the preceding fiscal year ended September 30, or for a consecutive 12-month period ending within 90 days before the date of the bonds to be issued, equal to at least 1.25 times average annual principal and interest requirements of outstanding and proposed additional Revenue Bonds as a condition for issuance of Additional Bonds (“revenue bond coverage”). The
“Summary of Net Revenues for Revenue Bond Coverage – Cash Basis” (Table 15 herein) presents Net Revenues for coverage using cash receipts and operating cash disbursements. In determining revenue bond coverage, Net Revenues do not include non-operating disbursements, e.g., additions to the utility plant.
In addition to the coverage requirement described above, which is a condition necessary for the issuance of additional Revenue Bonds, the authorizing ordinance stipulates that revenue bond coverage must be maintained each year. The latter requirement is effective whether or not Additional Bonds are issued. The level of Net Revenues necessary in each year is 1.25 times the principal and interest requirements of outstanding Revenue Bonds, during the year in which such requirements are scheduled to be the greatest.
TABLE11 – HISTORICALCOVERAGERATIOS(1)
The table below presents coverage ratios for ten previous years. The figures shown are revenue bond coverage of average annual principal and interest requirements and of maximum annual principal and interest requirements, for all Revenue Bonds outstanding at September 30 of each year. Net Revenues used to compute the coverage levels for each year presented below are for the fiscal year ended September 30.
(1) Table 14 herein entitled “Projected Coverage and Fund Balances” indicates projected coverage levels after the present issuance of Bonds, using Net Revenues of the fiscal year ended September 30, 2013.
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Year Average Maximum Year Average Maximum
2013 3.10x 1.85x 2008 2.97x 1.52x
2012 2.99x 1.73x 2007 2.74x 1.40x
2011 2.86x 1.58x 2006 3.08x 1.56x
2010 2.54x 1.40x 2005 2.35x 1.38x
2009 2.76x 1.43x 2004 2.26x 1.26x
TABLE12 – OPERATIONS ANDMAINTENANCE FORWATERSUPPLY ANDWASTEWATERTREATMENT(AMOUNTS INTHOUSANDS) The City has obtained most of its water supply through contractual agreements with surface reservoir operating entities. Also, a small portion of the City's wastewater is treated by the TRA and the City of Garland. In addition, as discussed in this Official Statement in “THE WATER AND WASTEWATER SYSTEM – Water Supply – Lake Palestine,” the City’s financial obligation to TRWD for the Integrated Pipeline Project is treated as an operating expense. The following table summarizes the monetary effect, as of September 30, 2014, of major agreements for raw water supply and wastewater treatment, and the Integrated Pipeline Project”:
(1)Unaudited.
OTHERCONTRACTS… For each agreement listed in Table 12 above, operation and maintenance expenses continue after final payment of capital obligations. Each agreement provides in effect that the City may enjoy its benefits for the useful lives of relevant facilities. Previously existing capital obligations for water supply in Lakes Ray Roberts, Fork, Palestine, Tawakoni, Lewisville, and Grapevine have been fully paid.
All payments of operation and maintenance expenses under the contracts listed in Table 12 above are considered as such in computation of revenue bond coverage. Applicable statutory laws and contracts determine the coverage effect of the expenditure requirements of certain contracts. As a result, principal and interest payments to TRA, to the Sabine River Authority under the Lake Fork contract, and to TRWD relating to the Integrated Pipeline Project, are treated as “operating expenses”. The City is authorized under State law to execute additional water supply and wastewater treatment contracts with public entities which may provide for payments thereunder as operation and maintenance expenses of the System for revenue bond coverage purposes.
INTERESTANDSINKINGANDRESERVEFUNDS... In accordance with the City Charter, all receipts and revenues of the City's Water Utilities Department are devoted only to purposes relating to the System and its indebtedness and to payment of amounts equal to ad valorem taxes and other charges that would be due the City if the Water Utilities Department were not a city-owned public utility. The City’s revenue bond ordinance for the System state, in effect, that all System revenues are pledged, in order of priority, to: (1) necessary expenses of operation and maintenance, (2) current payments of Revenue Bond principal and interest, (3) accumulation of a debt service Reserve Fund, and (4) any other lawful purpose not inconsistent with the City Charter. Under the terms of the Underlying Ordinance, depreciation and any PILOT payments and any other similar payments are not considered expenses of operation and maintenance of the System.
For each series of outstanding Revenue Bonds, equal amounts are set aside monthly for the next payment of interest and of principal.
In addition to funds required and restricted for current debt service, the authorizing City ordinance for each series of Revenue Operation and
M aintenance Expenses
Raw Water Supply Contract With 2014(1)
Lake Ray Roberts United States $ 378
Lake Fork Sabine River Authority 3,332
Lake Palestine Upper Neches River 522
M unicipal Water Authority
Lake Tawakoni Sabine River Authority 3,143
Lakes Lewisville and Grapevine United States 624
Wastewater Treatment
Wastewater Treatment Trinity River Authority 4,744
Wastewater Treatment City of Garland 668
Integrated Pipeline Project
Water Transmission Tarrant Regional Water District 14,073
27,484
$
Bonds requires a monthly deposit of an amount equal to 1/60 of the difference between the balance in the Reserve Fund immediately after an issue of Revenue Bonds, and the average annual principal and interest requirements of all outstanding Revenue Bonds.
Amounts so deposited are required to be held and restricted as a Reserve Fund for Revenue Bond debt service. Such deposits must continue until the reserve amount equals the average annual principal and interest requirements of all outstanding Revenue Bonds.
In addition, if so determined by the City, proceeds from the sale of Revenue Bonds also may be used to satisfy funding requirements for the Reserve Fund. The Reserve Fund is also available for current debt service if the Interest and Sinking Fund is insufficient for this purpose.
COMMERCIALPAPERNOTESPAYABLE... Since 1987, the City has utilized commercial paper as a means to finance, on an interim basis, capital improvements to the System. Currently, the City utilizes two series of commercial paper notes for improvements to the System. The City utilizes a tax-exempt commercial paper program, Series D, for improvements to the System, limited at any one time and from time to time to $300,000,000 in principal amount of commercial paper outstanding. Under the terms of the ordinance establishing the Series D commercial paper program, the authority to issue Series D commercial paper notes expires September 30, 2035. In addition, the City utilizes a tax-exempt commercial paper program, Series E, for improvements to the System, limited at any one time and from time to time to $300,000,000 in the principal amount of commercial paper outstanding.
Under the terms of the ordinance establishing the Series E commercial paper program, the authority to issue Series E commercial paper notes expires September 30, 2034.
The City has two different liquidity agreements with three banks. The Series D program is supported by two revolving credit agreements, the Sub-Series D-1 Credit Agreement with State Street Bank and Trust Company, and the Sub-Series D-2 Credit Agreement with Bank of America, N.A., replacing an existing combined liquidity agreement with State Street Bank and the California State Teachers’ Retirement System. The Sub-Series D-1 Credit Agreement supporting Sub-Series D-1 of the Notes, which extends to January 8, 2018, is in an aggregate amount not exceeding $241,643,836 (of which amount $16,643,836 is intended to cover interest for 270 days at 10%). The Sub-Series D-2 Credit Agreement supporting Sub-Series D-2 of the Notes, which extends to January 8, 2018, is in an aggregate amount not exceeding $80,547,946 (of which amount $5,547,946 is intended to cover interest for 270 days at 10%). The Series E commercial paper program is supported by a liquidity facility delivered by JPMorgan Chase Bank, National Association (“JPMC”). The liquidity agreement supporting the Series E commercial paper program (the “JPMC Agreement”), which extends to September 30, 2017, is in an aggregate amount not exceeding $322,191,780.82 (of which amount
$22,191,780.82 is intended to cover interest for 270 days at 10%).
The obligation of the City under the Sub-Series D-1 Credit Agreement, the Sub-Series D-2 Credit Agreement and the JPMC Agreement (collectively, the “Liquidity Agreements”) to repay advances made by a provider is subordinate to the obligation to pay debt service on the outstanding Previously Issued Parity Bonds, the Bonds and any Additional Bonds. Any advances under the Liquidity Agreements would be secured by a lien on Pledged Revenues subordinate to the lien securing the Bonds.
On March 10, 2015, Commercial Paper Notes in the aggregate principal amount of $216,565,000 were outstanding, maturing on various dates through March 31, 2015, having interest rates ranging from 0.04% to 0.06%. All of the Commercial Paper Notes outstanding on March 10, 2015 will be refunded with proceeds of the Series 2015A Bonds.