RECOMMENDATION:
Adopt an Ordinance authorizing the issuance of Public Improvement and Refunding Bonds (“Series 2023A Bonds”) in one Series, in an aggregate amount not to exceed $285 million; authorizing certain designated city officials to approve the principal amount, interest rates, prices, terms and sale thereof; authorizing such officials to determine the outstanding obligations to be refunded, defeased and refinanced; and approving the preparation, distribution and use of a preliminary official statement and official statement in connection with such offering.
SPECIFIC EXPLANATION:
The Series 2023A Bonds will be issued to refund certain outstanding general obligation (tax supported) commercial paper notes. The principal amount of the Series 2023A Bonds will not exceed $285 million, which shall include refunding approximately $255 million of outstanding general obligation (tax supported) commercial paper notes and financing certain public improvements in an approximate amount of $5 million relating to the 2022 bond election. As part of the Series 2023A Bonds, the election proceedings relating to the November 2022 bond election will be approved as part of the bond issuance. Such approval will allow the City to use the 2022 voter authorization as part of its commercial paper programs that fund the CIP.
Commercial Paper:
The City has been issuing short term commercial paper to fund its Capital Improvement Program and equipment procurements for over 20 years. Consistent with the City’s financial policies, outstanding general obligation (tax supported)commercial paper notes are periodically refinanced with long term fixed rate bonds with a final maturity to match the useful life of the capital improvement project or equipment financed with such commercial paper. This transaction represents the normal refinancing of these commercial paper notes with long term fixed rate refunding bonds.
Recommendation:
The Finance Working Group recommends the Bonds be issued through a negotiated financing with Raymond James serving as book running manager along with Jefferies and Ramirez & Co. Inc. as co-senior managers. Hilltop Securities, Piper Sandler Co., and Wells Fargo Securities are recommended as co-managers.
This transaction was presented to the Budget and Fiscal Affairs Committee on April 4, 2023.
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William Jones, Chief Business Officer/Director of Finance Chris B. Brown, Houston City Controller