HomeMy WebLinkAboutOrdinance 20928-09-2013 City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL.ACTION: Approved on 9/10/2013 - Ordinance Nos. 20928-09-2013 & 20929-09-
201'3;
DATE: Tuesday, September 10, 2013 REFERENCE NO.: G-17991
LOG NAME: 1313 DP NOTE APP
SUBJECT:
Adopt Appropriation Ordinances in an Amount Not to Exceed $100,000,000.00 Each in Support of the
City's Water and Sewer System Direct-Purchase Note Program (ALL COUNCIL DISTRICTS)
RECOMMENDATION:
It is recommended that the City Council:
1. Adopt the attached appropriation ordinance increasing estimated receipts and appropriations in the
Water and Sewer Capital Projects Fund in the amount of$100,000,000.00 from available funds for the
purpose of interim financing for the construction of eligible projects for the City's Water and Sewer System;
and
2. Adopt the attached appropriation ordinance increasing estimated receipts and appropriations in the
Water and Sewer Capital Projects Fund in the amount up to $100,000,000.00 from available cash for
interim payments on eligible construction projects for the City's Water and Sewer System.
DISCUSSION:
On March 26, 2013, (M&C C-26169) the City Council authorized the sale of short-term notes to Wells
Fargo in an aggregate principal amount at any one time outstanding of no greater than the amount of
$100,000,000.00 for the Water and Sewer System for the purpose of providing a short-term financing
option for the department's ongoing capital projects. In 2004 and 2007, (M&Cs C-20014 and C-22028)
the City Council had previously authorized an alternative short-term financing option in the form of a
commercial paper program with an aggregate principal amount of$150,000,000.00 at any one time.
These programs provide short-term financing for capital projects that will ultimately be long-term financed
through the issuance of bonds. The Direct-Purchase Note Program offers two delivery alternatives; the
City can actually issue short-term debt for interim financing or can use the liquidity and contracting
authority represented by the program to initiate a project and use cash from the City portfolio to fund the
project until such time as the City issues debt to replenish the portfolio.
In connection with establishing the Direct-Purchase Note Program, it was determined that an aggregate
principal amount of$100,000,000.00 for the Direct-Purchase Note Program would result in savings of
approximately $795,000 annually on fees when compared to the fees associated with the commercial
paper program and its $150,000,000.00 aggregate principal. Enacting a smaller program without
compromising the Water and Sewer System's ability to deliver capital projects was partially predicated on
the ability to use available cash-on-hand as a bridge financing source to make payments between the
initial execution of the contract and the issuance of the long-term debt; thereby, freeing up capacity in the
short-term note program and replenishing authority to the extent of any cash payments.
Logname: 1313 DP NOTE APP Pagel of`2