HomeMy WebLinkAboutOrdinance 23030-12-2017 Ordinance No. 23030-12-2017
AN ORDINANCE INCREASING THE ESTIMATED RECEIPTS AND APPROPRIATIONS IN
THE CALLABLE COMMERCIAL PAPER PROGRAM FUND (FORMERLY THE WATER
AND SEWER DPN FUND) BY $50,000,000.00, FROM AVAILABLE FUNDS, RESULTING
IN TOTAL APPROPRIATION AUTHORITY FOR THE PROGRAM IN THE AMOUNT OF
$150,000,000.00; PROVIDING FOR A SEVERABILITY CLAUSE; MAKING THIS
ORDINANCE CUMULATIVE OF PRIOR ORDINANCES; REPEALING ALL ORDINANCES
IN CONFLICT HEREWITH;AND PROVIDING AN EFFECTIVE DATE.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH, TEXAS:
SECTION 1.
That in addition to those amounts allocated to the various City departments for Fiscal Year 2017-2018 in the
Budget of the City Manager, there shall also be increased estimated receipts and appropriations in the
Callable Commercial Paper Program Fund (formerly the Water and Sewer DPN Fund) by $50,000,000.00,
from available funds, resulting in total appropriation authority for the program in the amount of
$150,000,000.00.
SECTION 2.
That should any portion, section or part of a section of this ordinance be declared invalid, inoperative or void
for any reason by a court of competent jurisdiction, such decision, opinion or judgment shall in no way impair
the remaining portions, sections, or parts of sections of this ordinance, which said remaining provisions shall
be and remain in full force and effect.
SECTION 3.
That this ordinance shall be cumulative of Ordinance 22928-09-2017 and all other ordinances and
appropriations amending the same except in those instances where the provisions of this ordinance are in
direct conflict with such other ordinances and appropriations, in which instance said conflicting provisions of
said prior ordinances and appropriations are hereby expressly repealed.
SECTION 4.
This ordinance shall take effect upon adoption,
APPROVED AS TO FORM AND LEGALITY: CITY SECRETARY
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J.Y. Strong, Assists ity Attorney MaJ. 1,6yser�lp U
ADOPTED AND EFFECTIVE: December 5. 2017
City of Fort Worth, Texas
Mayor and Council Communication
--1.
COUNCIL ACTION: Approved on 12/5/2017 -Ordinance Nos. 23028-12-2017, 23029-12-
2017, & 23030-12-2017
DATE: Tuesday, December 5, 2017 REFERENCE NO.: C-28496
LOG NAME: 13WATER LIQUIDITY- COMMERCIAL PAPER PROGRAM
SUBJECT:
Adopt Ordinance Authorizing a Callable Commercial Paper Program with J.P. Morgan for the Water
Department in an Aggregate Outstanding Principal Amount Not to Exceed $150,000,000.00 at Any One
Time, Authorizing Execution of Dealer, Paying Agent/Registrar and Calculation Agent Agreements for the
Program and Ordaining Other Matters Related Thereto; Adopt Thirty-Second Supplemental Ordinance
Authorizing Issuance and Sale of City of Fort Worth, Texas Water and Sewer System Revenue Refunding
Bonds in an Amount up to $150,000,000.00 to Allow for Refinancing of Outstanding Commercial Paper if
Needed and Adopt Appropriation Ordinance (ALL COUNCIL DISTRICTS)
RECOMMENDATION:
It is recommended that the City Council:
1. Adopt the attached ordinance authorizing a 20-year callable commercial paper program with J.P.
Morgan for the Water Department in an aggregate outstanding principal amount not to exceed
$150,000,000.00 at any one time, with an annual cost of$20,500.00; authorizing execution of Dealer,
Paying Agent/Registrar and Calculation Agent Agreements for the program, authorizing certain officers
and employees to act on behalf of the City in the selling and delivery of the obligations, and resolving
other matters incident and related to the issuance, sale, security and delivery of the obligations;
2. Adopt the attached Thirty-Second Supplemental Ordinance authorizing issuance and sale of City of
Fort Worth, Texas Water and Sewer System Revenue Refunding Bonds in an aggregate principal amount
not to exceed $150,000,000.00 to allow outstanding commercial paper to be refunded/refinanced for a
longer term if needed; and
3. Adopt the attached appropriation ordinance, increasing appropriations in the Water and Sewer Callable
Commercial Paper Fund (formerly the Water and Sewer DPN Fund (56014)) by $50,000,000.00 for a total
appropriation of$150,000,000.00, to support contracting authority under the callable commercial paper
program.
DISCUSSION:
The purpose of this Mayor and Council Communication (M&C) is to take actions to establish a new, more
cost-effective liquidity facility for the City's Water and Sewer System to enable the continued efficient and
cost-effective implementation of capital improvements.
For the last five years, the City's Water and Sewer Utility System has employed a financing tool known as
the Direct Purchase Note, or DPN, Program. The DPN program has provided appropriation authority for
capital projects identified within the Water and Sewer Capital Improvement Program. The Water
Department has used this appropriation in conjunction with Council-adopted reimbursement resolutions to
facilitate the initial award of capital improvement contracts that will ultimately be financed by longer term
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bonds issued after the project has commenced. During the initial period of construction with interim
contact payments are generally being paid out of current revenues. When System revenue bonds are
then issued, a portion of the proceeds are used to replenish the DPN program and reimburse the
System's revenues for its interim payments.
The existing program was authorized on March 26, 2013, with a five year term that is set to expire on
March 31, 2018. City staff and our financial consultants are recommending the authorization of a new
program that will replace the current DPN program. The new program, a callable commercial paper
program, is offered through J.P. Morgan Securities LLC (hereinafter referred to as "J.P. Morgan") and
provides additional benefits at lower cost to the City while still achieving the utility's intended use.
The commercial paper program offers considerable benefits, including an additional $50 million of
appropriation authority at a significantly reduced annual cost. The callable CP may be issued without the
need for bank liquidity support and is structured in a manner that upon initial issuance, the callable CP will
have an original call date between three and 120 business days. As is customary for commercial paper
products, the maturity date will not be greater than 270 days from the date of issuance. Under this
structure, the City has several options: a) to call the commercial paper when it reaches the original call
date; b) to replace the CP with new CP notes similarly structured; c) to issue long-term debt; or d) to allow
the paper to continue to the maturity date and pay the maturing CP by one of the previously identified
methods. CP notes may be issued from time to time in an aggregate principal amount outstanding at any
one time not to exceed $150,000,000. The current intent is to utilize the CP program as appropriation
authority only.
On October 30, 2017, City staff and consultants held a call with S&P Global Ratings to discuss the
mechanics of the replacement CP program in order to establish an investment grade rating, as is required
by Chapter 1371, Government Code, the statutory authority for establishing the CP program. The utility
System's strong financial performance and strong market access resulted in the CP program being
awarded S&P's highest short-term rating of A-1+.
In conjunction with the execution of the commercial paper program, the M&C package includes the thirty-
second supplemental ordinance authorizing the sale of water and sewer revenue refunding bonds up to
the $150,000,000 authorized under the CP program. This supplemental ordinance will allow the City to
refund the appropriations drawn against the CP program with revenue bonds if needed. Subsequent
supplemental ordinances are anticipated for adoption at the end of each calendar year which will grant the
City flexibility to restore the full appropriation authority with the program upon the issuance of long term
refunding bonds and enhance the credit rating for the CP program.
The City reserves a termination right under the existing DPN Agreement, enabling the City to terminate at
any time with written notice of no fewer than five business days prior to the effective termination date. As
such, upon adoption of the CP Program and the approval by the Office of the Attorney General of Texas,
the existing DPN Agreement will be rescinded at no cost to the City.
FISCAL INFORMATION / CERTIFICATION:
The Director of Finance certifies that funds are available in the Water Operating Fund, as appropriated to
cover the expenses of implementing the callable commercial paper program. Upon approval of the above
recommendations, appropriation authority of$150,000,000.00 for this program will be implemented.
FUND IDENTIFIERS (FIDs):
TO
Fundl Department ccoun Project JProgramActiviity Budget Reference # mount
ID ID Year Chartfield 2
Logname: 13WATER LIQUIDITY - COMMERCIAL PAPER PROGRAM Page 2 of 3
FROM
Fund Department ccoun Project Program ctivity Budget Reference # moun
ID ID Year Chartfield 2
CERTIFICATIONS:
Submitted for City Manager's Office by; Susan Alanis (8180)
Originating Department Head: Aaron Bovos (8517)
Additional Information Contact: Alex Laufer (2268)
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