HomeMy WebLinkAboutOrdinance 11979ORDINANCE NO. ~~
RN ORDINANCE amending Ordinance No. 10538 relating to the
issuance of short term obligations; approving an amendment to
the existing Credit Agreement; authorizing the issuance of notes
in book entry form in accordance with procedures established by
DTC; and ordaining other matters related thereto
THE STATE OF TEXAS .
COUNTIES OF TRRRANT AND DENTON
CITY OF FORT WORTH
WHEREAS, the City of Fort Worth, Texas (the "City" or the
^Issuer") heretofore passed on March 8, 1990, Ordinance No. 10538,
which authorized the establishment of a short term obligation
program to provide interim financing for additions, improvements
and extensions to the City's combined water and sewer system; and
WHEREAS, Ordinance No. 10538 requires that a credit facility
be issued in support of the "Project Notes" issued under the terms
of said Ordinance; and
WHEREAS, the City originally executed a Credit Agreement with
The Mitsui Bank, Limited, dated as of March 1, 1990 (the "Original
Credit Agreement"), with respect to the provision of a line of
credit in support of the City's Water and Sewer System Commercial
Paper Notes, Series A; and
WHEREAS, the obligations of The Mitsui Bank, Limited, under
the Original Credit Agreement have been duly assumed by The Sakura
Bank, Limited, Houston Agency ("Sakura"); and
WHEREAS, Sakura has presented to the City, by letter dated
March 2, 1995, a proposal whereunder Swiss Bank Corporation, New
York Branch (the "Bank"), would assume the obligation to provide
the line of credit in accordance with the terms of the Original
Credit Agreement; and
WHEREAS, Ordinance No. 10538 does not permit the City to issue
Project Notes in book entry only form; and
WHEREAS, the City Council deems it necessary and advisable to
adopt this Ordinance to supplement the terms of Ordinance No. 10538
to permit Project Notes to be issued in book entry only form, to
acknowledge and confirm the relationship between the Bank and
Sakura with respect to the credit facility to be provided by the
Bank under the terms of the Original Credit Agreement, as amended
in the manner hereafter approved; now, therefore
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT WORTH,
TEXAS:
Section 1. That the First Amended and Restated Credit
Agreement, by and among the City, the Bank and Sakura, in
substantially the form attached hereto and made a part hereof for
all purposes, is hereby approved. The City Manager or the designee
thereof, the City Attorney, and the City Secretary are hereby
authorized to execute, affix the seal of the City to, and deliver
said Agreement on behalf of the City In addition, the Mayor, the
City Manager or the designee thereof, the Director of Fiscal
Services and the City Secretary each are hereby authorized to
execute and deliver such instruments as may be necessary to effect
the intent of said Agreement, including, without limitation, the
Revolving Note described in the Original Credit Agreement, as
amended by said Agreement.
Section 2. That Section 2.02 of Ordinance No. 10538 is hereby
supplemented by adding the following language with respect to
utilization of a book entry only system of registration of Project
Notes, including specifically, without by way of limitation,
Commercial Paper Notes:
"If an Authorized Representative determines that it is
possible and desirable to provide for a book-entry only system of
Commercial Paper Note registration with DTC, such Authorized
Representative, acting for and on behalf of the City, is hereby
authorized to approve, execute, and deliver a Letter of
Representations to DTC and to enter into such other agreements and
execute such instruments as are necessary to implement such book-
entry only system, such approval to be conclusively evidenced by
the execution thereof by said Authorized Representative. Under the
initial Book Entry System with DTC, (i) no physical Note
certificates will be delivered to DTC and (ii) the City will
execute and deliver to the Issuing and Paying Agent, as custodian
for DTC, a master note relating to the Commercial Paper Notes (the
"Master Note") in substantially the form hereinafter set forth.
Except as provided herein, the ownership of the Notes shall be
registered in the name of Cede & Co., as nominee of DTC, which will
serve as the initial securities depository for the Notes.
Ownership of beneficial interests in the Notes shall be shown by
book entry on the. system maintained and operated by DTC and DTC
Participants, and transfers of ownership of beneficial interests
shall be made only by DTC and the DTC Participants by book entry,
and the City and the Issuing and Paying Agent shall have no
responsibility therefor, DTC will be required to maintain records
of the positions of the DTC participants in the Notes, and the DTC
Participants and persons acting through the DTC participants will
be required to maintain records of the purchasers of beneficial
interests in the Notes. Except as provided in clause (i) of this
paragraph, the Notes shall not be transferable or exchangeable,
except for transfer to another securities depository or to another
nominee of a securities depository.
With respect to Commercial Paper Notes registered in the name
of DTC or its nominee, neither the City nor the Issuing and Paying
Agent shall have any responsibility or obligation to any DTC
Participant or to any person on whose behalf a DTC Participant
holds an interest in the Commercial Paper Notes. Without limiting
the immediately preceding sentence, neither the City nor the
Issuing and Paying Agent shall have any responsibility or
obligation with respect to (1) the accuracy of the records of DTC
or any DTC Participant with respect to any ownership interest in
the Commercial Paper Notes, (ii) the delivery to any DTC
Participant or any other person, other than a registered owner of
the Commercial Paper Notes, as shown on the Registration Books, of
any notice with respect to the Commercial Paper Notes, including
any notice of redemption, and (iii) the payment to any DTC
Participant or any other person, other than a registered owner of
the Commercial Paper Notes, as shown in the Registration Books, of
any amount with respect to principal of and premium, if any, or
interest on the Commercial Paper Notes.
Whenever, during the term of the Commercial Paper Notes, the
beneficial ownership thereof is determined by a book entry at DTC,
the requirements in this Ordinance of holding, registering,
delivering, exchanging, or transferring the Commercial Paper Notes
shall be deemed modified to require the appropriate person or
entity to meet the requirements of DTC as to holding, registering,
delivering, exchanging, or transferring the book entry to produce
the same effect.
Either the City or DTC may determine to discontinue the Book-
Entry Only System and in such case, unless a new Book-Entry Only
System is put in place, physical certificates in the form set forth
in Section 2.07(x) shall be provided to the beneficial holders.
If at any time, DTC ceases to hold the Commercial Paper Notes,
all references herein to DTC shall be of no further force or
effect.
Whenever the beneficial ownership of the Commercial Paper
Notes is determined by a book entry at DTC, delivery of Commercial
Paper Notes for payment at maturity shall be made pursuant to DTC's
payment procedures as are in effect from time to time and the DTC
Participants shall transmit payment to beneficial owners whose
Commercial Paper Notes have matured. The City and each Issuing and
Paying Agent, Bank, and the Dealer are not responsible for transfer
of payment to the DTC Participants or beneficial owners
As used herein, the term "DTC" shall mean The Depository Trust
Company or any substitute securities depository appointed pursuant
to this Ordinance, or any nominee thereof, and the term "DTC
Participant" shall mean a member of, or the participant in, DTC
that will act on behalf of a Holder "
The Mayor, City Secretary, City Attorney, and the Director of
Fiscal Services are hereby authorized to take such actions and
execute such instruments including, but not by way of limitation,
the DTC Letter of Representations, the Project Notes, and the DTC
Master Note, in such format as is acceptable to DTC, as shall be
necessary to implement a book-entry only system of registration of
Project Notes. In addition, the Director of Fiscal Services and
the Assistant Director of Fiscal Services each are hereby
designated to act as an Authorized Representative.
If an Authorized Representative, acting on behalf of the City,
exercises the authority hereby granted to provide for a book-entry
only system of registration, the Authorized Representative shall
direct the Issuing and Paying Agent to attach to the DTC Master
Note the current form of Commercial Paper Note, and the terms of
the Commercial Paper Note shall be deemed to be incorporated by
reference into the DTC Master Note.
Section 3. The covenants contained in Section 9 08 of
Ordinance No. 10538, under the heeding "Notes to Remain Tax Exempt"
are hereby reaffirmed by the City; provided, however, that (i) the
reference to "section 1.103-13(b)(12) of the Treasury Regulations"
in subsection (f)(2) of said Section 4.08 shall hereafter refer to
"section 1.148-1(b) of the Treasury Regulations and (ii) it is
hereby acknowledged that the term "proceeds" as used in said
Section 4 08 shall include "disposition proceeds" as defined in the
Treasury Regulations.
Section 4. That the proper officials of the City are hereby
authorized to submit all necessary records and proceedings
pertaining to the amendment of the Original Credit Agreement and
the adoption of this Ordinance to the Attorney General of the State
of Texas for the approval thereof, as required by Ordinance No.
10538 and Article 717q, Texas Revised Civil Statutes, as amended.
Section 5. That the City hereby finds that the amendments to
Ordinance No. 10538 to permit the change in the form of the Notes,
to permit the registration of the Notes to be effected through a
book-entry only system, as described in Section 2 of this
Ordinance, are deemed to be desirable and shall not materially
affect the interests of the Holders of the Notes.
Section 6. That this Ordinance shall be effective immediately
from and after its passage in accordance with the provisions of
Section 2 of Chapter 25 of the Charter of the City, and it is
accordingly so ordained
ADOPTED this 6th day of June, 1995
r/'
Mayo r
ATTEST•
~J C.~1,/.L.s-~~~
City Secretary
APPROVED AS TO FORM AND LEGALITY:
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City ney
(SEAL)
City of Fort [forth, Texas
Mayor and Counccill Communication
DATE RSFSRSNCS NUMBSR LOG NAME- PAGE
06/06/95 **G11113 13DTC 1 of 2
SUBJECT AN ORDINANCE AMENDING ORDINANCE NO 10538 RELATING TO THE ISSUANCE
OF SHORT-TERM OBLIGATIONS, APPROVING AN AMENDMENT TO THE EXISTING
CREDIT AGREEMENT, AUTHORIZING THE ISSUANCE OF NOTES IN BOOK ENTRY
FORM IN ACCORDANCE WITH PROCEDURES ESTABLISHED BY DEPOSITORY TRUST
CORPORATION(DTC), AND ORDAINING OTHER MATTERS RELATED THERETO
RECOMMENDATION
It is recommended that the City Council adopt the attached ordinance which
1 amends Ordinance No 10538 to approve and authorize the execution of the First Amended
and Restated Credit Agreement among the City, Swiss Bank Corporation and The Sakura
Bank,
2 further amends Ordinance No 10538 to allow for the use of a book-entry only system of
commercial paper note registration with Depository Trust Corporation (DTC)
DISCUSSION
Ordinance No 10538, adopted March 8, 1990, authorized the establishment of a commercial
paper program to provide interim financing for additions, improvements and extensions to the
City's water and sewer system Ordinance No 10538 requires that a credit facility be issued
in support of the "Project Notes" issued under the terms of the ordinance
The credit rating of Sakura Bank, the current provider of the backup credit facility, recently
reduced to "A2" An analysis by Lehman Brothers, the remarketing agent for the commercial
paper notes, indicates that with the backing of a "AA" liquidity provider, the interest paid on the
Project Notes would be 1 /4 of 1 % lower than the rates currently being paid, producing a savings
for the Water and Wastewater Enterprise Fund After extensive discussions between the City,
First Southwest Company, Sakura Bank, and Lehman Brothers, Sakura has proposed to
incorporate Swiss Bank Corporation (a "AAA" bank) as the "fronting" line of credit bank This
will result in the Project Notes being traded with the liquidity support of the higher rated Swiss
Bank Corporation All parties agree that this change will improve the trading cost of the notes
and reduce the City's interest costs
Ordinance No 10538 does not permit the City to issue "Project Notes" in book entry only form
The Depository Trust Company (DTC) has recently implemented a book entry program for issuers
of tax-exempt commercial paper DTC acts as a depository for its direct participants and
facilitates the settlement among participants in deposited securities through electronic
computerized book-entry changes in participants' accounts, thereby eliminating the need for
physical movement of securities The efficiencies of a book entry system vastly simplify the
process of transferring securities for market participants Greater efficiencies in the commercial
paper market may result in a further lowering of interest rates for the City It was determined
=~~ Printed on recycled paper
City of Fort Worth, Texas
Mayor and Council Communication
DATI3
06/06/95 RBLr13R$NCB NUI+~SR
**G11113 LOG NAMS
13DTC PAGE
2 of 2
SUBJECT AN ORDINANCE AMENDING ORDINANCE NO 10538 RELATING TO THE ISSUANCE
OF SHORT-TERM OBLIGATIONS, APPROVING AN AMENDMENT TO THE EXISTING
CREDIT AGREEMENT, AUTHORIZING THE ISSUANCE OF NOTES IN BOOK. ENTRY
FORM IN ACCORDANCE WITH PROCEDURES ESTABLISHED BY DEPOSITORY TRUST
CORPORATION(DTC), AND ORDAINING OTHER MATTERS RELATED THERETO
by staff that because of the need for the City Council to approve the amended credit agreement,
it would be desirable to provide for the possibility of converting the registration of the Project
Notes to a book-entry system
FISCAL INFORMATION/CERTIFICATION•
The Director of Fiscal Services certifies that this particular action will require no additional
expenditure of City funds
CB w
Submitted for City Manager's F[JND ACCOUNT CENTER AMOUNT CITY SECRETARY
Office by: (to)
Charles Boswell 8500 APPDOt/CO
Originating Department Head: ~~`~ COUNC~E
.
Jim Keyes 8517 (from) ~~~
For Additional Information /J~_ ' _ , ~~~~`~
Contact: Citq Seoret~as7OI1~
'
Jim Keyes 8517 City of Fort 1R
~t~'~
~~
Adopted Ordinance Na. ~~~~ ~~~ Printed on recycled paper