ORDINANCE supplementing the City of Houston, Texas Combined Utility System Master Ordinance; providing for the issuance of Combined Utility System First Lien Revenue and Refunding Bonds, Series 2018D and Combined Utility System First Lien Revenue and Refunding Bonds, Series 2018E in one or more Series or Subseries as may be further designated; authorizing the Mayor and City Controller to approve the amounts, interest rates, prices, and terms thereof and certain other matters relating thereto; providing for the payment thereof; making other provisions regarding such bonds including the use of one or more Preliminary Official Statements and authorizing the preparation and distribution of one or more Official Statements and matters incident thereto; awarding the sale of the bonds; authorizing the defeasance, final payment, and discharge of certain outstanding Combined Utility System Commercial Paper Notes and certain Combined Utility System Bonds; authorizing a bond counsel agreement, and a special disclosure counsel agreement; authorizing the execution and delivery of a Paying Agent/Registrar Agreement and other related documents; making other provisions regarding such bonds; and declaring an emergency

SUBJECT: 

 An Ordinance Supplementing the City of Houston, Texas Combined Utility System Master Ordinance; providing for the issuance of Combined Utility System Revenue Obligations and authorizing the issuance of City of Houston, Texas, Combined Utility System First Lien Revenue and Refunding Bonds, Series 2018D&E.

RECOMMENDATION:

Approve an Ordinance Supplementing the City of Houston, Texas Combined Utility System Master Ordinance; providing for the issuance of Combined Utility System Revenue Obligations and authorizing the issuance of City of Houston, Texas, Combined Utility System First Lien Revenue and Refunding Bonds Series, 2018D&E.

SPECIFIC EXPLANATION:

In 1993, City Council began authorizing various commercial paper programs to provide appropriation capacity and on-time funding for various needs of the City. The issuance of commercial paper has provided an expedient, cost-effective method of accessing cash and providing interim financing. The commercial paper notes are later refinanced to fixed rate bonds that match the useful life of the project or equipment being financed. 

This transaction represents the normal refunding of the commercial paper notes through issuance of the tax-exempt Series 2018D bonds. The total refunding of commercial paper will be in an amount up to $250 million. Additionally, as standard course of business, in conjunction with this transaction, the Finance Working Group (FWG) will review possibilities to refinance existing debt if prudent opportunities to achieve present value savings exist. Series 2018D will be used for refundings that can be done on a tax-exempt basis, and Series 2018E will be used for refundings that do not qualify for tax-exempt status. The potential amount of refunding candidates is up to $410 million, for a total transaction size of up to $660 million.

The FWG recommends the Series 2018D and 2018E Bonds be issued through a negotiated financing with Piper Jaffray as book running manager along with Citigroup and FTN Financial as co-senior managers.  Blaylock Van, LLC, Stifel Nicolaus & Co., and Estrada Hinojosa & Co., Inc. are recommended as co-managers.  Orrick, Herrington & Sutcliffe LLP and Bates & Coleman are recommended as co-bond counsel along with Haynes & Boone and The Chevalier Law Firm, LLC as co-disclosure counsel.

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

Recommendation

The FWG recommends approval of this item.

April 21, 2004 - (O) 2004-299

Melissa Dubowski                                  Phone: 832-393-9101