ORDINANCE supplementing the Master Ordinance relating to the issuance of City of Houston, Texas Airport System Subordinate Lien Revenue Bonds, and/or revenue refunding bonds in one or more series; providing for the payment thereof; authorizing the Mayor, the City Controller and other designated City Officials to approve the amount, interest rates, prices, redemption provisions and terms thereof; determining and authorizing the redemption, or defeasance of outstanding bonds or other obligations; approving other related procedures, provisions and agreements pertaining to such refunding and/or defeasance; authorizing the execution and delivery of one or more Bond Purchase Agreements, Paying Agent/Registrar Agreements, Escrow Agreements, and such other agreements relating to the bonds or the security thereof; authorizing an official to declare intent to reimburse; approving the form of Credit Enhancement Agreements with any bond insurer and debt service reserve fund policy provider; and making certain findings and other declarations necessary and incidental to the issuance of the bonds; and declaring an emergency

An Ordinance supplementing the Master Ordinance relating to the issuance of the City of Houston, Texas Airport System Subordinate Lien Revenue Bonds, and/or Revenue Refunding Bonds in one or more series

RECOMMENDATION:

Approve an Ordinance supplementing the Master Ordinance relating to the issuance of the City of Houston, Texas Airport System Subordinate Lien Revenue Bonds and/or Revenue Refunding Bonds in one or more series; providing for the payment thereof; authorizing the Mayor, the City Controller and other designated City officials to approve the amount, interest rates, prices, redemption provisions and terms thereof;

SPECIFIC EXPLANATION:

The Finance Working Group (the “FWG”) is recommending issuing bonds to refinance certain auction rate securities (ARS), certain outstanding airport system bonds and to finance all related costs of issuance.

The authorized bonds (the “HAS Bonds”) will be issued to refinance approximately $242 million of auction rate securities into long-term fixed rate debt.

As a standard course of business, in conjunction with this transaction, the FWG will review possibilities to refinance existing debt if prudent opportunities to achieve present value savings exists. The total potential size of the 2018CD Bonds (approximately up to $652 million) includes approximately $410 million for this purpose, which will result in present value savings currently estimated at $60 million, subject to market conditions and further due diligence.

The Finance Working Group recommends the HAS Bonds be issued through a negotiated financing with Siebert Cisneros Shank & Co serving as book running manager along with J.P. Morgan Securities LLC and Raymond James as co-senior managers. Hutchinson, Shockey, Erley & Co., Mesirow Financial and SAMCO Capital Markets, Inc. are recommended as co-managers. Bracewell LLP and West & Associates, LLP are recommended as co-bond counsel along with Norton Rose Fulbright, LLP as disclosure counsel.

This transaction was presented to the Budget and Fiscal Affairs Committee on April 24th 2018.

Recommendation

The Finance Working Group recommends approval of this transaction.

Melissa Dubowski                                    Phone: 832-393-9101