ORDINANCE supplementing the Master Ordinance relating to the issuance of City of Houston, Texas Airport System Senior Lien Commercial Paper Notes, Series A and Series B Program; authorizing the amendment and restatement of such program and providing for the payment with respect thereto; authorizing certain designated City Officials to approve certain terms including interest rate, price and terms relating to the sale and delivery of the Notes; authorizing a Credit Agreement relating to the security of the Notes; ratifying and confirming one or more Dealer Agreements, an Issuing and Paying Agent Agreement and other related agreements; approving the form of an Offering Memorandum; authorizing a Co-Bond Counsel Agreement; making certain findings and other declarations necessary and incidental to the issuance of Notes; and declaring an emergency

SUBJECT: 

An Ordinance authorizing and ratifying the City of Houston, Texas Airport System Senior Lien Commercial Paper Notes, Series A & B Program; authorizing the execution and delivery of one or more dealer agreements; authorizing a Reimbursement Agreement and a credit provider; and approving the form of an offering memorandum.

RECOMMENDATION: (Summary)

An Ordinance authorizing and ratifying the City of Houston, Texas Airport System Senior Lien Commercial Paper Notes, Series A & B Program, in an amount not to exceed $150 million; authorizing the execution and delivery of one or more dealer agreements; authorizing a Reimbursement Agreement and a credit provider; and approving the form of an offering memorandum.

SPECIFIC EXPLANATION:

Starting in 1993, City Council began authorizing commercial paper programs (the “CP”) to provide appropriation capacity and “on time” funding for various capital expenditures of the City to be funded with proceeds of debt. The issuance of commercial paper has provided an expedient, cost-effective method of providing interim financing. Commercial paper notes are later refinanced with fixed rate bonds with maturities matching the useful lives of the projects or equipment being financed.

The current credit facility that supports the Houston Airport System Senior Lien Commercial Paper Notes, Series A & B expires on December 16^th, 2016. The CP program currently support capital expenditures related to the Houston Airport System’s Capital Improvement Plan projects. The aggregate amount of the commercial paper program will not exceed $150 million.

The Finance Working Group (the “FWG”) recommends replacing the existing credit facility with a direct pay letter of credit proposed by Sumitomo Mitsui Banking Corporation, in the amount of $150 million, plus interest. The proposed liquidity facility will have a 5-year term agreement with the City.

The FWG also recommends U.S. Bank National Association as issuing/paying agent, along with Bracewell LLP and Bratton & Associates as co-note counsel. Citigroup, JP Morgan, Loop Capital and Rice Financial are recommended as dealers.

This transaction was presented to the Budget and Fiscal Affairs Committee on October 4^th 2016.

Recommendation:

The Finance Working Group recommends approval of this item.

For additional information contact:

Tantri Emo                                                  Phone: 832-393-9076