SUBJECT: 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; 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
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; 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
SPECIFIC EXPLANATION:
The Finance Working Group (the “FWG”) is recommending issuing bonds to finance a portion of the Airport’s capital improvement plan, to refund certain outstanding commercial paper notes and 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 $100 million of commercial paper notes and $70 million of auction rate securities (ARS) into long-term fixed rate debt, and to refund approximately $270 million in existing fixed rate debt for savings.
Additionally, this transaction will provide up to $178 million in funding to exercise the option to refinance the City’s investment in the Hobby International terminal, pay early termination fee to United for Terminal C lease and make a contribution to the debt service reserve fund, as required by the HAS master bond ordinance. The combined not to exceed amount for the transaction will be $618 million.
The Finance Working Group recommends the HAS Bonds be issued through a negotiated financing with Bank of America serving as book running manager along with Citigroup and Ramirez & Co. as co-senior managers. Fidelity, Mesirow Financial and Siebert Brandford Shank & Co. are recommended as co-managers. Bracewell LLP and Edgardo E. Colon, P.C. are recommended as co-bond counsel along with Norton Rose Fulbright, LLP and West & Associates, LLP as co-disclosure counsel.
This transaction was presented to the Budget and Fiscal Affairs Committee on October 3rd 2017.
Recommendation
The Finance Working Group recommends approval of this transaction.