HomeMy WebLinkAboutOrdinance 25677-08-2022ORDINANCE NO. 25677-08-2022
AN ORDINANCE INCREASING ESTIMATED RECEIPTS AND
APPROPRIATIONS IN THE GENERAL DEBT SERVICE FUND, IN THE
AMOUNT OF $3 00,000.00 , FROM TRANSFERRED INTEREST, FOR THE
PURPOSE OF PAYING COST OF ISSUACE RELATED TO THE EXTENDABLE
COMMERCIAL PAPER PROGRAM, WITH SUCH SUBJECT TO REDUCTION
TO CONFORM TO FINAL FIGURES REFLECTED IN THE CLOSING
DOCUMENTS; 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 2021-2022 in the
Budget of the City Manager, there shall also be increased estimated receipts and appropriations in the
General Debt Service Fund in the amount of $300,000.00, from transferred interest, for the purpose of paying
cost of issuance re lated to the extendable commercial paper program, with such amount subject to conform
to final figures reflected in the closing documents.
SECTION 2.
That should any portion , section or part of a section of this ordinance be declared inva lid , 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 shal l be and remain in full force and effect.
SECTION 3.
That this ordinance shall be cumulative of Ordinance 25073-09-2021 and all other ord in ances and
appropriations amending the same except in tho se 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of said prior ordinances and appropriation s are hereby express ly repealed.
SECTION 4.
This ordinance shall take effect upon adoption .
APPROVED AS TO FORM AND LEGALITY:
Assistant City Attorney
ADOPTED AND EFFECTIVE: August 23, 2022
CITY SECRET ARY
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Jannette S. Goodall (Aug 25, 2022 10:1
Jannette S. Goodall
City Secretary .. •···· •····· ....
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City of Fort Worth, Texas
Mayor and Council Communication
DATE: 08/23/22 M&C FILE NUMBER: M&C 22-06 07
LOG NAME: 13 GO EXTENDABLE COMMERCIAL PAPER PROGRAM
SUBJECT
(ALL) Adopt Ordinance Authorizing an Extendable C ommercial Paper Prog ram w ith Loop Capita l in an Aggregate Outstanding Principal Amount
Not to Exceed $300 ,000 ,000 .00 at Any One Time , Authorizing Ex ecution of Dealer, Paying Agent/Registrar, and Other Agreements for the
Program and Ordaining Oth er Matters Related Th ereto ; Adopt Ordinance Authorizing Issu a nce and Sale of C ity of Fort Worth , Texas General
Purpose Refunding Bonds in an Amount Up to $300 ,000 ,000 .00 to Allow for Refinancing of O utstanding Commercial Paper; and Adopt
Appropriation Ordinance
RECOMMENDATION:
It is recommended that the City Council:
1. Adopt the attached o rdinance authoriz ing a 20-year extendable commercial paper program w ith Loop Capital Markets LLC in an aggregate
outstanding principal amount not to exceed $300 ,000 ,000.00 at any one time and with an annual cost of $22 ,000 .00 , as a liquidity and
appropriation facility for the implementation of City general obligation debt proje cts , including the 2022 Bond Program ; authorizing execution
of Dealer, Paying Agent/Registrar, and other 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 ordinance authorizing issuance and sale of City of Fort Worth , Tex as Gene ral Pu rpose Refunding Bonds in an aggregate
principal amount not to exceed $300 ,000 ,000.00 to allow outstanding commerc ial paper to be refunded /refinanced fo r a long e r term if
needed ;and
3. Adopt the attached ordinance , increasing appropriations in the General Debt Servi ce Fund in the amount of $300 ,000 .00 , from transferred
interest , for the purpose of paying costs of issuance related to the extendable commercial paper program , with such amount subje ct to
reduction to conform to final figures reflected in the closing documents .
DISCUSSION:
The purpose of this Mayor and Council Communication (M&C) is to take actions to establish a cost-effective liquidity program to assist with the
award of contracts for the City of Fort Worth's (City) general obligation debt capital projects , in c luding the 2022 Bond Program , to enable an
efficient, cost-effective and timely implementation of capital improvements wh ile facilitating the City's practice of issuing bonds in arrears.
Prior to 2014 , the City issued bonds in advance of beginning its capital projects for a bond program . While such approach provided ready
liquidity , it resulted in the City paying interest for a substantial period of tim e before bond projects were completed .
In an effort to reduce total interest costs of bond programs and be better stewards of public funds , beginning in 2014 the City began issuing its
bonds in arrears . Once the voters approved a bond proposition , the City Cou ncil would adopt a resolution expressing its intent to cash-advance
project costs and reimburse itself when bonds were issued toward the end of a project's implementation .
To make such a model functional , the City previously awarded and initially paid contracts for bond programs using available po oled cash as the
source of funds. While such approach can be workable for a smaller scale bond program , the 2022 program authorized $560 million across its five
propositions , and pooled cash alone is insufficient to 'float ' such a large program . Additionally, the intermittent market disruptions that have taken
place throughout the COVID-19 Pandemic show the need for an add itional facility to backstop awards made against available pooled cash.
City staff and our financial consultants are recommending the authorization of an Extendable Commercial Paper (ECP) program , offered through
Loop Capital Markets LLC (Loop) which provides a source of appropriation authority at a low cost to the City .
The City plans to use this program as appropriation authority in conjunction with Council-adopted reimbursement resolutions to facilitate the initial
award of capital improvement contracts that will ultimately be financed by longer term bonds issued after the projects have commenced. Staff does
not anticipate actually issuing commercial paper but instead plans to use the appropriation authority the ECP provides to support execution of
large-dollar contracts with the smaller interim progress payments anticipated to be paid out of current revenues and pooled cash. When general
purpose bonds are issued each year, proceeds will be used to reimburse the source of the interim payments .
The ECP program offers cons iderable benefits , including $300 ,000 ,000.00 of appropriation authority at a relatively low annual cost. The ECP may
be issued without the need for bank liquidity support and is structured in a manner that upon initial issuance , the ECP will have a maturity date not
to exceed 270 days , including any extens ions. Under this structure , if the C ity were to issue commercial paper and its maturity date were
approaching , the City would have several options at the stated maturity date : a) to replace the ECP with new ECP notes similarly structured orb)
to issue long-term debt. The extendable feature would be used in the instance that th e dealer cannot succ essfully remarket the ECP on a stated
maturity date. If that happens , the ECP notes will begin to accrue interest at a penalty rate until the extended maturity date . At the extended maturity
date , the City may attempt another remarketing of the ECP or issue long-term debt to re fund the ECP notes . ECP notes may be issued from time
to time in an aggregate principal amount outstanding at any one time not to exceed $300 ,000 ,000 .00. The c urrent inte nt is to utilize the ECP
program as appropriation authority only and not to actually issue any commercial paper.
City staff and consultants will forward the program documents to S&P Global Ratings in order to establish an investment grade rating , as is
required by Chapter 1371 , Government Code , the statutory authority for establishing the ECP program . S&P Global Ratings uses a mapping
system to assign a short term rating to the program, based upon the long-term rating of the City .
In conjunction with the execution of the commercial paper program , the M&C package includes an ordinance authorizing the sale of general
purpose refunding bonds up to the $300 ,000 ,000.00 authorized under the ECP program. In the unlikely event ECP were issued , this ordinance
would allow the City to refund the issued paper with general purpose refunding bonds , if needed. Because such refunding authority is based on
time-limited delegated authority , the ordinance would require annual re-adoption.
The attached appropriation ordinance utilizes a portion of the City's interest-payment revenues , which were previously deposited into the Debt
Service Fund, to pay the costs of setting up this program, including charges of the City's financial advisors and outside bond attorneys . Because
the ECP program involves setting up a structure and framework but no actual issuance is anticipated , there are no debt proceeds to pay such
"costs of issuance," which is the standard practice when the City actually issues debt. Also, given the differences between this program
framework and a standard bond issuance , modified services agreements with the financial advisors and bond attorneys may be required and are
authorized by the ECP ordinance . The transferred interest in question is not pledged or attributable to any of the City's outstanding debt
obligations.
FISCAL INFORMATION/ CERTIFICATION:
The Director of Finance certifies that funds are currently available in fund balance within the General Debt Service Fund and upon approval of the
above recommendations and adoption of the attached appropriation ordinance , funds will be available in the 2022 Bond Program Fund and the
General Debt Service Fund . Prior to an expenditure being incurred , the Financial Management Services Department has the responsibility of
verifying the availability of funds.
Submitted for City Manager's Office by: Reginald Zeno 8517
Originating Business Unit Head: Reginald Zeno 8517
Additional Information Contact: Anthony Rousseau 8338
Expedited