HomeMy WebLinkAboutIR 7580 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7580
A''.«� February 11, 1992
10 It.,p To the Mayor and Members of the City Council
ws
�rtx�g. Subject: FIRST AMENDMENT TO SIXTEENTH SUPPLEMENTAL DALLAS-FORT WORTH
loll REGIONAL AIRPORT CONCURRENT BOND ORDINANCE AND APPROVAL OF
EXECUTION AND DELIVERY OF LETTER OF CREDIT AND REIMBURSEMENT
AGREEMENT
BACKGROUND
In the summer of 1990, with the substantial drop in interest rates, the Dallas-
Fort Worth Airport Board staff began exploring refunding possibilities for its
Series 1982A Bonds. The interest rate on these series of bonds was as high as
10.75X.
Joint Revenue Bonds issued by the Cities of Fort Worth and Dallas for the purpose
of funding the Dallas-Fort Worth Airport are "private activity" bonds for
purposes of the Federal Internal Revenue Code (the "Code*) . The Code prevents
an advance refunding (more than 90 days prior to the call date) of private
activity bonds. The Series 1982A Bonds were not callable until May 1, 1992, so
it was determined to authorize a series of bonds in the Fall of 1990 for delivery
in the Spring of 1992 in order to lock in the savings offered by the market at
that time.
The Series 1992 Bonds were authorized on October 9, 1990, to be delivered as
variable rate bonds with an initial delivery of March 25, 1992. An interest rate
swap was entered into in connection with the authorization of the Series 1992
Bonds with Merrill Lynch & Co. , pursuant to which Merrill would make payments to
the Airport Board prior to March 25, 1992, in an amount so as to lower the debt
service due on the Series 1982 Bonds to 7.9976X and pay to the Airport Board a
variable rate after March 25, 1992, based on an index in exchange for the Airport
Board paying a fixed rate of 7.9976X. This interest rate swap results in fixed
borrowing cost since the variable rate paid by Merrill and owed on the Series
1992 Bonds cancel each other out. In connection with the Series 1992 Bonds, the
Cities approved the initial sale thereof to Merrill and agreed to take all action
necessary for the delivery thereof and Merrill agreed to initially purchase and
thereafter remarket the Series 1992 Bonds.
The Airport Board staff has negotiated with National Westminster Bank for a five-
year, direct-pay Letter of Credit for the Series 1992 Bonds. A credit facility
is required by the market for variable rate debt and such arrangement was
contemplated in the Sixteenth Supplemental Bond Resolution authorizing the Series
1992 Bonds. The Airport Board is now requesting the Cities to approve the
execution and delivery of a Letter of Credit and Reimbursement Agreement with the
Bank.
The Airport Board has also requested certain technical amendments to the
Sixteenth Supplemental Ordinance to improve the Updates Program and meet certain
requirements of the Bank.
PRIOR ACTION
October 9, 1990 -- Adoption of Ordinance No. 10585, the Sixteenth Supplemental
Regional Airport Concurrent Bond Ordinance authorizing the Series 1992 Bonds, and
Ordinance No. 10687 authorizing an Escrow Agreement and a Forward Purchase
Agreement for the Series 1992 Bonds.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No 7580
February 11, 1992
�o44oRr�6x To the Mayor and Members of the City Council • Page 2 Of 2
v ti..!z
*�xt�`'. Subject: FIRST AMENDMENT TO SIXTEENTH SUPPLEMENTAL DALLAS-FORT WORTH
,•,' REGIONAL AIRPORT CONCURRENT BOND ORDINANCE AND APPROVAL OF
EXECUTION AND DELIVERY OF LETTER OF CREDIT AND REIMBURSEMENT
AGREEMENT
January 7, 1992 -- Adoption of a Joint Resolution appointing a TEFRA hearing
officer and authorizing the Mayor to approve the Series 1992 and 1992A Bonds for
TEFRA purposes.
CURRENT ACTION
February 11, 1992 -- Adoption of the First Amendment to the Sixteenth
Supplemental Regional Airport Concurrent Bond Ordinance amending the Sixteenth
Supplemental Regional Airport Concurrent Bond Ordinance, authorizing and
approving the execution of a Letter of Credit and Reimbursement Agreement and
ordaining other matters incident and related thereto.
If additional information is required, it will be furnished upon request.
DAVID IVORY
7
CITY MANAGER
[ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS--