Agenda Information Sheet
DEPARTMENT: Finance
ACM: Bryan Langley
Date: August 2, 2016
SUBJECT
Title
Consider adoption of an ordinance considering all matters incident and related to the issuance, sale and delivery of up to $46,000,000 in principal amount of "City of Denton General Obligation Refunding Bonds, Series 2016" (including up to $15,700,000 for Electric Fund activities, up to $27,900,000 for Water Fund Activities, and up to $2,400,000 for Wastewater Fund activities); authorizing the issuance of the Bonds; delegating the authority to certain City officials to execute certain documents relating to the sale of the Bonds; approving and authorizing instruments and procedures relating to said Bonds; and enacting other provisions relating to the subject. Audit/Finance Committee recommends approval (2-0).
Body
BACKGROUND
As a result of the current historically low interest rate environment, staff is proposing the refunding of $46,140,000 and the payoff of $6,990,000 in outstanding Utility System Revenue Bonds ($53.13 million in total) in August 2016. These outstanding bonds are broken down as follows by utility: $18.855 million for Electric, $31.42 million for Water, and $2.855 million for Wastewater. While the City anticipates net savings of approximately $5.2 million as a result of the refunding, the other benefit of this plan is that approximately $17.8 million in bond covenant obligated cash will become available to the utilities. Currently, the City is required by its revenue bond covenants to maintain four separate funds: Utility Interest & Sinking Fund, Utility Bond Reserve Fund, Utility Extension & Improvement Fund, and Utility Emergency Fund. The cash balances maintained in each fund are dictated by the revenue bond covenants as a type of guarantee to revenue bond holders while these bonds are outstanding. Since staff's proposal is to refund and payoff all outstanding revenue bonds, then the City is no longer obligated to keep these ca...
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