HomeMy WebLinkAboutR2012-042�soLUT1oN No. �012-042
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS
RELATING TO THE ISSUANCE OF REFUNDING BONDS AND COMMERCIAL PAPER
BY THE TEXAS MUNICIPAL POWER AGENCY AND PROVIDING THE APPROVAL OF
THE CITY FOR THE ISSUANCE THEREOF SUBJECT TO CERTAIN PARAMETERS AND
CONDITIONS; PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the Texas Municipal Power Agency (the "Agency") has heretofore been
created and established as a municipal power agency by the cities of Bryan, Denton, Garland,
and Greenville, Texas (the "Member Cities"); and
WHEREAS, the Agency has represented to the Member Cities as follows:
A) the Agency has issued and has outstanding commercial paper notes styled as the
"Texas Municipal Power Agency Commercial Paper Notes, Series 2005" (the "Series
2005 Commercial Paper Notes") under a commercial paper program (the "2005 CP
Program") for which liquidity is provided through a bank credit facility providing a
current principal capacity of $255,000,000 (the "2005 Bank Facility");
B) as of November 1, 2012, the Agency had $213,000,000 of outstanding commercial
paper notes under the 2005 CP Program, the proceeds of which were used to fund capital
costs of generation and transmission facilities for the Agency (including through the
repayment of previously issued commercial paper notes);
C) the Board of the Agency (the `Board") has approved new investment in transmission
facilities by the Agency in the amount not to exceed $60,000,000 (the "New
Transmission Investment");
D) the Agency will require sufficient capacity in its 2005 CP Program or in a
replacement commercial paper program (collectively, the "CP Program") to fund the
New Transmission Investment and to fund other lawful purposes of the Agency;
E) the Agency has determined to refund a portion of the outstanding Series 2005
Commercial Paper, the proceeds of which are allocable to expenditures for generation
facilities of the Agency, with fixed rate debt through the issuance of junior subordinate
lien revenue refunding bonds that will mature not later than September 1, 2018 (the
"Fixed Rate Refunding Bonds"), thereby converting a portion of the outstanding Agency
commercial paper to fixed rate debt;
F) the Agency intends to reduce the capacity of the CP Program to $100,000,000
following the issuance of the Fixed Rate Refunding Bonds to reflect the conversion of a
portion of its commercial paper to fixed rate debt and to have capacity sufficient to cover
approximately $30,000,000 of existing commercial paper and an additional $70,000,000
for its purposes described in (D) above;
G) in accordance with its terms, the 2005 Bank Facility will terminate not later than
April 26, 2013 (the "Scheduled Termination Date");
H) the Agency has determined to amend the 2005 CP Program or to replace the 2005 CP
Program with a new commercial paper program on or prior to the Scheduled Termination
Date, and following such action the principal capacity of the CP Program will be
$100,000,000 and the CP Program will have a final maturity date of September l, 2018;
I) in the event that a new commercial paper program is established to replace the 2005
CP Program, the establishment of such new program will be accomplished through the
refunding of all then outstanding Series 2005 Commercial Paper Notes with commercial
paper notes ("Series 2013 Commercial Paper Notes") issued under the new program (the
"2013 Commercial Paper Program"); and
� the issuance of the Fixed Rate Refunding Bonds and the Series 2013 Commercial
Paper Notes (if issued), will replace the 2005 CP Program with fixed rate debt or with
other variable rate debt, respectively, and the Agency therefore cannot demonstrate
interest rate savings within the meaning of that certain Global Compromise and
Settlement Agreement among the Agency and the Member Cities, which has an effective
date of December 17, 2009 (the "Global Settlement Agreement"), due to the future
uncertainty of the rates at which the refunded commercial paper would have borne
interest had it not been refunded, and/or the uncertainty of the future interest rates of the
Series 2013 Commercial Paper Notes; and
WHEREAS, in accordance with Section 2(B) of Global Settlement Agreement, the
Agency and the Member Cities have agreed that (i) the Agency may issue new debt to refinance
existing debt, provided such refinancing does not extend the term of the debt beyond September,
1, 2018, (ii) the issuance of any debt other than debt that is part of a Transmission Financing
Program (as defined in the Global Settlement Agreement) may be issued by the Agency only if
such debt is approved by the governing bodies of each Member City, and (iii) any Agency debt
issued to refinance generation-related debt shall be for the purpose of interest rate savings only
and is pursued without the use of early or short calls.
WHEREAS, the City Council (the "Governing Body") of the City of Denton, Texas
deems it appropriate to approve the issuance by the Agency of the Fixed Rate Refunding Bonds
and the establishment of the 2013 Commercial Paper Program (including the issuance of the
Series 2013 Commercial Paper Notes) or the modification of the Series 2005 CP Program, in
each case to restructure the CP Program to provide $100,000,000 of commercial paper capacity
for Agency purposes and in order to accommodate a new bank liquidity agreement for the CP
Program; and
WHEREAS, the Governing Body deems it appropriate to set forth certain parameters
relating to the approval of the matters described above.
THE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES:
Section 1. For all purposes of the Global Settlement Agreement, the Governing Body
hereby approves the issuance of the Fixed Rate Refunding Bonds, provided that the Fixed Rate
Refunding Bonds (i) shall not exceed $180,000,000 in principal amount, (ii) shall mature on one
or more dates, but not later than September 1, 2018, (iii) may be made subject to optional or
mandatory redemption prior to maturity, (iv) shall bear interest at a true interest cost not to
exceed 4%, (v) shall be secured by a pledge of the Agency's net revenues, which pledge shall be
subordinate to the pledge securing the Agency's first lien revenue bonds, second lien commercial
paper notes and junior lien (third lien) revenue bonds, and (vi) the resolution of the Agency
authorizing the issuance of the Fixed Rate Refunding Bonds shall contain a covenant of the
Agency to use its best efforts to implement the provisions of either Section 2 or 3 hereof.
Section 2. If the Board determines it is in the best interest of the Agency to create the
2013 Commercial Paper Program, for all purposes of the Global Settlement Agreement, the
Governing Body hereby approves the creation of the 2013 Commercial Paper Program by the
Agency to refund and replace commercial paper notes issued and outstanding under the 2005 CP
Program, provided that, (i) the 2013 Commercial Paper Program shall be established not later
than 90 days after the date of issuance of the Fixed Rate Refunding Bonds, (ii) the principal
capacity of the 2013 Commercial Paper Program shall not exceed $100,000,000 (such capacity
to be evidenced by the resolution authorizing the issuance of the Series 2013 Commercial Paper
Notes and the banlc liquidity facility that supports the 2013 Commercial Paper Program), (iii) no
commercial paper note issued under the 2013 Commercial Paper Program shall mature after
September 1, 2018, and (iv) commercial paper notes issued under the 2013 Commercial Paper
Program shall be secured by a pledge of the Agency's net revenues, may be subject to
redemption prior to maturity and may be entitled to the benefit of a Credit Agreement (within the
meaning of Section 1371.001(1), Texas Government Code).
Section 3. If the Board does not create the 2013 Commercial Paper Program in
accordance with Section 2 of this resolution, the Governing Body hereby approves for all
purposes of the Global Settlement Agreement the modification of the 2005 CP Program, which
shall occur not later than 90 days after the date of issuance of the Fixed Rate Refunding Bonds,
to provide that the principal capacity of the 2005 CP Program shall not exceed $100,000,000
(such capacity to be evidenced by the resolution, as amended, authorizing the issuance of the
Series 2005 Commercial Paper Notes and the bank liquidity facility that supports the 2005 CP
Program). Following such modification the resolution authorizing the issuance of the Series
2005 Commercial Paper Notes shall provide that no commercial paper note issued under the
2005 Commercial Paper Program may mature after September 1, 2018.
Section 4. In connection with the approvals provided in Sections 1 through 3, the
Governing Body waives compliance with Section 2(B)(5) of the Global Settlement Agreement.
Section 5. The definitions and recitals set forth in the preamble to this resolution axe
hereby incorporated in and made a part of this resolution for all purposes.
Section 6. This resolution shall talce effect from the date that the last Member City
approves a resolution in substantially the same form and content hereof, and the authorizations
herein shall be effective for a period of six months following the date of adoption hereof.
PASSED AND APPROVED this the /b�7�/'�day of December, 2012.
CITY OF DENTON, TEXAS
A Texas Municipal Corporation
BY:
MARK A. B U S, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
APPR ED A TO LEGAL FORM:
ANITA BURGESS, CITY ATTORNEY
BY: �%I
. `