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2017-01-24 Agenda with Backup
Tuesday, January 24, 2017 City of Denton Meeting Agenda City Council 2:00 PM City Hall 215 E. McKinney St. Denton, Texas 76201 www.cityofdenton.com Work Session Room After determining that a quorum is present, the City Council of the City of Denton, Texas will convene in a Work Session on Tuesday, January 24, 2017 at 2:00 p.m. in the Council Work Session Room at City Hall, 215 E. McKinney Street, Denton, Texas at which the following items will be considered: 1. Work Session Reports A. ID 16-1566 Receive a report, hold a discussion, and give staff direction regarding a proposed State of the City event and Denton Citizen Academy. Attachments: Exhibit 1 - Presentation B. ID 17-079 Receive a report, hold a discussion, and give staff direction regarding the Cole Ranch development. Attachments: Exhibit 1 -Abbreviated Presentation from Stratford Land Exhibit 2 - Cole Ranch Development Proposal C. ID 17-138 Receive a report and hold a discussion regarding the debt issuance associated with the Denton Energy Center. Attachments: Exhibit 1- Informal Staff Report D. ID 17-108 Hold a discussion and give staff direction on the recruitment process for a new City Attorney. Attachments: Exhibit 1- Proposal from Waters &Company Following the completion of the Work Session, the City Council will convene in a Closed Meeting to consider specific items when these items are listed below under the Closed Meeting section of this agenda. The City Council reserves the right to adjourn into a Closed Meeting on any item on its Open Meeting agenda consistent with Chapter 551 of the Texas Government Code, as amended, or as otherwise allowed by law. 1. Closed Meeting: A. ID 17-081 Deliberations regarding Personnel Matters - Under Texas Government Code Section 551.074; and Consultation with Attorneys - Under Texas Government Code Section 551.071. Consultation, discussion, and deliberation about the appointment, employment, and duties of the City Attorney including, but not limited to, the retirement of the current City Attorney, the appointment of an interim City Attorney, and the process by which a new City Attorney will be selected; consultation with the City's attorneys regarding associated legal issues where discussion of these legal matters in an open meeting would conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under the Texas Disciplinary Rules of City ofDenton Page 1 Printed on 1/20/2017 City Council Meeting Agenda January 24, 2017 Professional Conduct of the State Bar of Texas, or would jeopardize the City's legal position in any administrative proceeding or potential litigation. B. ID 17-077 Deliberations regarding Real Property - Under Texas Government Code Section 551.072; Consultation with Attorneys - Under Texas Government Code Section 551.071. Receive information from staff and discuss, deliberate, and provide staff with direction regarding the potential acquisition of real property interests generally located northwest of N. Loop 288 and west of N. Locust St. in the City of Denton, Denton County, Texas; discussions had, deliberation, and direction given, by the Denton City Council in an open meeting would have a detrimental effect on the position of the governmental body in negotiations with a third party. Consultation with the City's attorneys regarding legal issues associated with the acquisition of the real property interests described above; discussion of these legal matters in an open meeting would conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, or would jeopardize the City's legal position in any administrative proceeding or potential litigation. [Long Road Substation] C. ID 17-099 Consultation with Attorneys - Under Texas Government Code Section 551.071; Deliberations Regarding Real Property - Under Texas Government Code Section 551.072. Consultation with the City's attorneys regarding legal issues associated with the potential relocation of a Texas Municipal Power Agency transmission line (`Brinker TMPA transmission line") currently located on the east of E. Loop 288 and south of Brinker Road in the City of Denton, Denton County, Texas and the abandonment of certain transmission line easements related to the same and owned by the City; discussion of these legal matters in an open meeting would conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, or would jeopardize the City's legal position in any administrative proceeding or potential litigation. Receive information from staff and discuss, deliberate, and provide staff with direction regarding the potential relocation of the Brinker TMPA transmission line and the abandonment of certain City -owned transmission line easements related to the same; discussion had, deliberation, and direction given, by the Denton City Council in an open meeting would have a detrimental effect on the position of the governmental body in negotiations with a third party. [Relocation of TMPA Transmission Line - Brinker Road and E. Loop 288] D. ID 17-133 Deliberations regarding Personnel Matters - Under Texas Government Code Section 551.074; and Consultation with Attorneys - Under Texas Government Code Section 551.071. Discuss and deliberate regarding the evaluation of candidates and the appointment/employment of a City Auditor and consultation, deliberation and receipt of information from the City attorneys involving legal matters relating to City ofDenton Page 2 Printed on 112012017 City Council Meeting Agenda January 24, 2017 employment law and interviewing candidates, where a public discussion of these legal matters would clearly conflict with the duty of the City's attorneys to the City of Denton under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. Following completion of the Closed Meeting, the City Council will convene in a Special Called Meeting at which the following items will be considered: 1. ITEMS FOR INDIVIDUAL CONSIDERATION A. ID 17-134 Consider adoption of an ordinance approving an employment agreement for the City Auditor and authorizing the Mayor to execute said Agreement setting the compensation and terms of that employment; authorizing expenditures and actions; and providing an effective date. Attachments: Exhibit 1 - Ordinance 2. CONCLUDING ITEMS A. Under Section 551.042 of the Texas Open Meetings Act, respond to inquiries from the City Council or the public with specific factual information or recitation of policy, or accept a proposal to place the matter on the agenda for an upcoming meeting AND Under Section 551.0415 of the Texas Open Meetings Act, provide reports about items of community interest regarding which no action will be taken, to include: expressions of thanks, congratulations, or condolence; information regarding holiday schedules; an honorary or salutary recognition of a public official, public employee, or other citizen; a reminder about an upcoming event organized or sponsored by the governing body; information regarding a social, ceremonial, or community event organized or sponsored by an entity other than the governing body that was attended or is scheduled to be attended by a member of the governing body or an official or employee of the municipality; or an announcement involving an imminent threat to the public health and safety of people in the municipality that has arisen after the posting of the agenda. B. Possible Continuation of Closed Meeting topics, above posted. CERTIFICATE I certify that the above notice of meeting was posted on the bulletin board at the City Hall of the City of Denton, Texas, on the day of , 2017 at o'clock (a.m.) (p.m.) CITY SECRETARY NOTE: THE CITY OF DENTON CITY COUNCIL WORK SESSION ROOM IS ACCESSIBLE IN ACCORDANCE WITH THE AMERICANS WITH DISABILITIES ACT. THE CITY WILL PROVIDE SIGN LANGUAGE INTERPRETERS FOR THE HEARING IMPAIRED IF REQUESTED AT LEAST 48 HOURS IN ADVANCE OF THE SCHEDULED MEETING. PLEASE CALL THE CITY SECRETARY'S OFFICE AT 349-8309 OR USE TELECOMMUNICATIONS DEVICES FOR THE DEAF (TDD) BY CALLING 1 -800 -RELAY -TX SO THAT A SIGN LANGUAGE INTERPRETER CAN BE SCHEDULED THROUGH THE CITY SECRETARY'S OFFICE. City ofDenton Page 3 Printed on 1/20/2017 City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com , DENTON File #: ID 16-1566, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: City Manager's Office CM/ ACM: Bryan Langley Date: January 24, 2017 SUBJECT Receive a report, hold a discussion, and give staff direction regarding a proposed State of the City event and Denton Citizen Academy. BACKGROUND The City Manager's Office has identified opportunities to create two new programs to engage citizens in their local government: a State of the City event and Denton Citizen Academy. The State of the City would be an event open to all Denton residents and businesses that highlights the year's accomplishments and shares upcoming projects, initiatives, and priorities. A formal presentation would provide information about city-wide accomplishments, infrastructure improvements, growth and development, budget information, and other relevant information. Following the formal presentation, attendees would experience an open house atmosphere where they could visit with their council members; get information about city departments, programs, or initiatives; meet staff members; and enjoy family -friendly activities. This event would be planned for March 2017. The second proposed program, Denton Citizen Academy, is an opportunity for interested citizens to sign up for a series of workshops to give participants an interactive learning experience in local government. The sessions would be a combination of informative presentations, tours, and facilitated activities around topics such as: public safety and emergency management; growth and development; parks and recreation; libraries; utilities; sustainability; and the council-manager form of government. Both of these programs are designed to enhance the City's citizen engagement efforts, specifically to build greater connections and access between the residents and their local government in a fun, interactive environment. Staff will present additional details regarding these programs on January 24. PRIOR ACTION/REVIEW (Council, Boards, Commissions) March 3, 2016 - Committee on Citizen Engagement City of Denton Page 1 of 2 Printed on 1/20/2017 povveied by I_egivt9i IN File #: ID 16-1566, Version: 1 STRATEGIC PLAN RELATIONSHIP The City of Denton's Strategic Plan is an action -oriented road map that will help the City achieve its vision. The foundation for the plan is the five long-term Key Focus Areas (KFA): Organizational Excellence; Public Infrastructure; Economic Development; Safe, Livable, and Family -Friendly Community; and Sustainability and Environmental Stewardship. While individual items may support multiple KFAs, this specific City Council agenda item contributes most directly to the following KFA and goal: Related Key Focus Area: Organizational Excellence Related Goal: 1.3 Promote effective internal and external communication EXHIBITS Exhibit 1 - Presentation Respectfully submitted: Alison Ream Administrative Services Manager City of Denton Page 2 of 2 Printed on 1/20/2017 povveied by I_egist9i I;, City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com , DENTON File #: ID 17-079, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: City Manager's Office CM/ ACM: Bryan Langley Date: January 24, 2017 SUBJECT Receive a report, hold a discussion, and give staff direction regarding the Cole Ranch development. BACKGROUND Stratford Land is proposing to develop the Cole Ranch property on southwestern side of the city. As proposed, the development would encompass 3,100 acres and include 8,500 single family homes, 1,890 multi -family homes, and 3.65 million square feet of commercial space. Due to the high cost of developing this project, Stratford Land has proposed to utilize a Public Improvement District (PID) and Tax Increment Reinvestment Zone (TIRZ) as a financing mechanism. A PID allows special assessments to be levied and collected in a defined area, and a TIRZ allows the incremental growth in property tax revenues to be split between a developer and the taxing authorities. As proposed, these instruments would be utilized to pay for infrastructure costs and greater amenity packages in the Cole Ranch development. The City first adopted PID guidelines in 2007, and they were amended in 2014. Per the guidelines, the use of a PID is intended to bring a unique, high quality desired product to the City of Denton that does not currently exist, or exists in a limited manner. While the City does not have a formal TIRZ policy, these instruments have been used only for projects that provide a significant economic impact to the community. PIDs and TIRZs have been used in residential developments around the Metroplex, but they have not previously been used in Denton for similar projects. The purpose of this discussion, therefore, is to review the Cole Ranch project and determine whether the City Council is interested in pursuing a PID and/or TIRZ as a financing mechanism. Mr. Ocie Vest, with Stratford Land, will be present at the meeting to discuss this development and proposal in more detail with the City Council. A copy of Mr. Vest's presentation is attached as Exhibit 1, and the entire Cole Ranch development proposal is included as Exhibit 2. STRATEGIC PLAN RELATIONSHIP The City of Denton's Strategic Plan is an action -oriented road map that will help the City achieve its vision. The foundation for the plan is the five long-term Key Focus Areas (KFA): Organizational Excellence; Public City of Denton Page 1 of 2 Printed on 1/20/2017 povveied by I_egivt9i IN File #: ID 17-079, Version: 1 Infrastructure; Economic Development; Safe, Livable, and Family -Friendly Community; and Sustainability and Environmental Stewardship. While individual items may support multiple KFAs, this specific City Council agenda item contributes most directly to the following KFA and goal: Related Key Focus Area: Economic Development Related Goal: 3.1 Develop targeted policies and incentives to achieve desired economic growth EXHIBITS 1- Abbreviated Presentation from Stratford Land 2- Entire Cole Ranch Development Proposal Respectfully submitted: Bryan Langley Assistant City Manager City of Denton Page 2 of 2 Printed on 1/20/2017 povveied by I_egist9i I;, M N N N M U r M .N V C- M ry _Q) O U H N V a -j N M 11� T O a -j O E m a -j N O V vi N T U V Q � O V Q T V O a -j a -j Q) m Q) O N O N O � p T V l 1 T �' M N J N O O Q) N O X Q) :� Q) O V N N N -C V -C .N (U�' 4- N = M N + M N M N� N M N U E u V V L.- 4-j C _� Q N W N l/) z Q -C -C O a -j a -j Q) m Q) O N Q O N N O N 4-j 0 N N M 4, - Q V 0 cn Q) a � M _ -CV 4' L- ` 0 N MT O cn N Q +� Q� N rn w N N M N — CD c N > -0CD N M c N 0 Q) M 0 Q) M Q) M N III N N Q) M ►a O (10 Ln N I� al Ll) RCT m m 00 ern m n rn rn � � 0000' I� N rl N (10 00 Lr) l0 Lli N N 1q 00 O 111 r r4N b4 b4 N M N Lli .O s o Q °' v > > V o C 5 a o D � �. ~ ' Q � > FLO a -W w O w a c W O [� O W o W J O p p _0 V V '""' O Q 0 c� Q � Ln J 0 Om O O O Q +� -W -W +W _ Q V) O V) Q Q a a a O v o 0 o H Q) Q) QL E O U O LL O � C)o E _m O N � k+- � O� �cn c- U i o IL LL LL Q � k+- c- i Q a) o 'O' . > Q Oa Q) E—� U u o U 4-a) oQ) �� kLn V T O &j Q V) Ln O Q) a-1 _ _� Ln 'Q') 4-1 O O Q Q Q C� Q >, O Q) �V W U' Q iI m i;* �Nrn n'o� om 4-j 0 0 t(9 O a -j N Q) C- Q V cnQ O Ln L� N N O Az! 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McKinney St. - Denton, Texas 76201 www.cityofdenton.com , DENTON File #: ID 17-138, Version: 1 DEPARTMENT: ACM: Date: Finance Bryan Langley January 24, 2017 Legislation Text Agenda Information Sheet SUBJECT Receive a report and hold a discussion regarding the debt issuance associated with the Denton Energy Center. BACKGROUND The purpose of this work session is to provide the results of the sale of the Utility System Revenue Bonds, Series 2017 (hereafter, the "Bonds") authorized on June 21, 2016 (Ordinance No. 2016-187). The Bonds were authorized for a maximum principal amount of $265 million for the purpose of constructing the Denton Energy Center, a quick start peak power generation facility. The Bonds are secured and payable only from revenues of the City's Utility System, which is comprised of the Electric, Water and Wastewater Funds. On January 19, 2017, the City along with their financial advisor, First Southwest Company, conducted a negotiated sale of the Bonds. The amount of bond proceeds was $247,157,116 at an all -in true interest cost of 3.53%. In addition, these bonds have been rated as AA- by Standard and Poor's and A+ by Fitch. Exhibit 1 is an informal staff report on the sale that includes final debt schedules and rating reports. As a reconciliation of amounts originally estimated and communicated to the Council on June 14, 2016, the table below reflects a side-by-side comparison to final sale proceeds: Use CategoryEstimated Proceeds Actual Proceeds Project Cost $240,000,000 $225,000,000 Capitalized Interest $ 23,000,000 $ 20,598,306 Issuance Costs $ 2,000,000 $ 1,558,810 Grand Total $265,000,000 $247,157,116 STRATEGIC PLAN RELATIONSHIP The City of Denton's Strategic Plan is an action -oriented road map that will help the City achieve its vision. The foundation for the plan is the five long-term Key Focus Areas (KFA): Organizational Excellence; Public Infrastructure; Economic Development; Safe, Livable, and Family -Friendly Community; and Sustainability and City of Denton Page 1 of 2 Printed on 1/20/2017 povveied by I_egivt9i IN File #: ID 17-138, Version: 1 Environmental Stewardship. While individual items may support multiple KFAs, this specific City Council agenda item contributes most directly to the following KFA and goal: Related Key Focus Area: Organizational Excellence Related Goal: 1.1 Manage financial resources in a responsible manner EXHIBITS Exhibit 1 - Informal Staff Report Respectfully submitted: Chuck Springer, 940-349-8260 Director of Finance City of Denton Page 2 of 2 Printed on 1/20/2017 povveied by I_egist9i I;, Exhibit 1 Date: January 20, 2017 Report No. 2017-007 INFORMAL STAFF REPORT TO MAYOR AND CITY COUNCIL SUBJECT: City's sale of Utility System Revenue Bonds, Series 2017 BACKGROUND: The purpose of this report is to provide the City Council with details regarding the sale of the Utility System Revenue Bonds, Series 2017 (hereafter, the "Bonds") authorized on June 21, 2016 (Ordinance No. 2016-187). The Bonds were authorized for a maximum principal amount of $265 million for the purpose of constructing the Denton Energy Center, a quick start peak power generation facility. The Bonds are secured and payable only from revenues of the City's Utility System, which is comprised by the Electric, Water and Wastewater Funds. DISCUSSION: On January 19, 2017, the City along with their financial advisor, First Southwest Company, conducted a negotiated sale of the Bonds. The underwriting firms were: JP Morgan Securities LLC, Citigroup Global Markets Inc., and Robert W. Baird & Co. Inc. The delivery date of proceeds will be January 27, 2017. As approved by the City Council on June 21, 2016, the Bonds were authorized to be issued provided they met the following parameters: 1. The maximum principal amount of bonds shall not exceed $265,000,000; 2. The final stated maturity shall not 20 years from the date of issuance; 3. The Bonds shall bear interest at a fixed rate, and the net effective interest rate on the Bonds shall not exceed 4.000%; 4. The sale must occur on or prior to June 21, 2017; 5. The Bonds shall be rated by a Rating Agency for municipal securities in one of the four highest categories for long-term obligations. Staff is pleased to inform the Council that the above criteria were met. The amount of bond proceeds was $247,157,116 at an all -in true interest cost of 3.53%. In addition, these bonds have been rated as AA- by Standard and Poor's and A+ by Fitch. Staff would note that these ratings are similar to ratings previously issued by Standard and Poor's of AA- and Moodys of Al for the City's Utility System Revenue Bonds. Exhibit 1 Date: January 20, 2017 Report No. 2017-007 As a reconciliation of amounts originally estimated and communicated to the Council on June 14, 2016, the table below reflects a side-by-side comparison to final sale proceeds: Use Category Estimated Proceeds Actual Proceeds Project Cost $240,000,000 $225,000,000 Capitalized Interest $ 23,000,000 $ 20,598,306 Issuance Costs $ 2,000,000 $ 1,558,810 Grand Total $265,000,000 $247,157,116 Attached are the final debt schedules and ratings reports. Please do not hesitate to contact me if you have any further questions on the results of the City's most recent bond sale. ATTACHMENTS: 1. Final Debt Schedule 2. Fitch Rating Report 3. Standard & Poor's Rating Report STAFF CONTACT: Chuck Springer, Director of Finance (940)-349-8260 Charles.Springer(a cityofdenton.com First thvvest dP.wisl OrHIROO5kWr es Note: Final Exhibit 1 SOURCES AND USES OF FUNDS City of Denton, Texas $214,890,000 Utility System Revenue Bonds, Series 2017 (Electric Supported: $225 mm) Tax -Exempt Rates As of 01/19/2017 (AA- / Al) *** Amortized over 20 Years / Cap -I Until Dec. 31, 2018 / 10 Year Call *** *** Final Numbers *** Dated Date 01/27/2017 Delivery Date 01/27/2017 Sources: Bond Proceeds: Par Amount Premium 214,890,000.00 32,267,116.00 247,157,116.00 Uses: Project Fund Deposits: Project Fund 225,000,000.00 Other Fund Deposits: Capitalized Interest Fund 20,598,305.56 Delivery Date Expenses: Cost of Issuance 565,992.47 Underwriter's Discount 992,817.97 1,558,810.44 247,157,116.00 Jan 19, 2017 1:27 pm Prepared by FirstSouthwest (aml) (Finance 7.017 DENTON:2017_ELC-2017_REV) Page 1 First thwest dP.wisi OrHIROO5kWr" Exhibit 1 BOND SUMMARY STATISTICS City of Denton, Texas $214,890,000 Utility System Revenue Bonds, Series 2017 (Electric Supported: $225 mm) Tax -Exempt Rates As of 01/19/2017 (AA- / Al) *** Amortized over 20 Years / Cap -I Until Dec. 31, 2018 / 10 Year Call *** *** Final Numbers *** Dated Date 01/27/2017 Delivery Date 01/27/2017 First Coupon 06/01/2017 Last Maturity 12/01/2036 Arbitrage Yield 2.996065% True Interest Cost (TIC) 3.503576% Net Interest Cost (NIC) 3.831282% All -In TIC 3.527917% Average Coupon 4.980660% Average Life (years) 12.662 Weighted Average Maturity (years) 12.641 Duration of Issue (years) 9.627 Par Amount 214,890,000.00 Bond Proceeds 247,157,116.00 Totallnterest 135,522,638.89 Net Interest 104,248,340.86 Bond Years from Dated Date 2,720,977,666.67 Bond Years from Delivery Date 2,720,977,666.67 Total Debt Service 350,412,638.89 Maximum Annual Debt Service 18,077,750.00 Average Annual Debt Service 17,657,971.72 Underwriter's Fees (per $1000) Average Takedown 3.864477 Other Fee 0.755645 Total Underwriter's Discount 4.620122 Bid Price 114.553631 Par Average Average PV of 1 by Bond Component Value Price Coupon Life change Serial Bond 214,890,000.00 115.016 4.981% 12.662 177,080.95 214,890,000.00 12.662 177,080.95 All -In Arbitrage TIC TIC Yield Par Value 214,890,000.00 214,890,000.00 214,890,000.00 + Accrued Interest +Premium (Discount) 32,267,116.00 32,267,116.00 32,267,116.00 Underwriter's Discount -992,817.97 -992,817.97 Cost of Issuance Expense -565,992.47 Other Amounts Target Value 246,164,298.03 245,598,305.56 247,157,116.00 Target Date 01/27/2017 01/27/2017 01/27/2017 Yield 3.503576% 3.527917% 2.996065% Jan 19, 2017 1:27 pm Prepared by FirstSouthwest (aml) (Finance 7.017 DENTON:2017_ELC-2017_REV) Page 2 First thwest dP.wisi OrHIROO5kWr" Note: Final Exhibit 1 BOND SUMMARY STATISTICS City of Denton, Texas $214,890,000 Utility System Revenue Bonds, Series 2017 (Electric Supported: $225 mm) Tax -Exempt Rates As of 01/19/2017 (AA- / Al) *** Amortized over 20 Years / Cap -I Until Dec. 31, 2018 / 10 Year Call *** *** Final Numbers *** Jan 19, 2017 1:27 pm Prepared by FirstSouthwest (aml) (Finance 7.017 DENTON:2017_ELC-2017_REV) Page 3 First thwest dP.wisl OrHIROO5kWr es Exhibit 1 NET DEBT SERVICE City of Denton, Texas $214,890,000 Utility System Revenue Bonds, Series 2017 (Electric Supported: $225 mm) Tax -Exempt Rates As of 01/19/2017 (AA- / Al) *** Amortized over 20 Years / Cap -I Until Dec. 31, 2018 / 10 Year Call *** *** Final Numbers *** Period Ending Principal Coupon Interest Total Debt Service Capitalized Interest Fund Net Debt Service 09/30/2017 3,680,388.89 3,680,388.89 3,680,388.89 09/30/2018 10,685,000.00 10,685,000.00 10,685,000.00 09/30/2019 10,685,000.00 10,685,000.00 6,232,916.67 4,452,083.33 09/30/2020 7,580,000 5.000% 10,495,500.00 18,075,500.00 18,075,500.00 09/30/2021 7,970,000 5.000% 10,106,750.00 18,076,750.00 18,076,750.00 09/30/2022 8,375,000 5.000% 9,698,125.00 18,073,125.00 18,073,125.00 09/30/2023 8,805,000 5.000% 9,268,625.00 18,073,625.00 18,073,625.00 09/30/2024 9,260,000 5.000% 8,817,000.00 18,077,000.00 18,077,000.00 09/30/2025 9,735,000 5.000% 8,342,125.00 18,077,125.00 18,077,125.00 09/30/2026 10,200,000 ** % 7,873,500.00 18,073,500.00 18,073,500.00 09/30/2027 10,695,000 5.000% 7,380,875.00 18,075,875.00 18,075,875.00 09/30/2028 11,245,000 5.000% 6,832,375.00 18,077,375.00 18,077,375.00 09/30/2029 11,820,000 5.000% 6,255,750.00 18,075,750.00 18,075,750.00 09/30/2030 12,425,000 5.000% 5,649,625.00 18,074,625.00 18,074,625.00 09/30/2031 13,065,000 5.000% 5,012,375.00 18,077,375.00 18,077,375.00 09/30/2032 13,735,000 5.000% 4,342,375.00 18,077,375.00 18,077,375.00 09/30/2033 14,435,000 5.000% 3,638,125.00 18,073,125.00 18,073,125.00 09/30/2034 15,180,000 5.000% 2,897,750.00 18,077,750.00 18,077,750.00 09/30/2035 15,955,000 5.000% 2,119,375.00 18,074,375.00 18,074,375.00 09/30/2036 16,775,000 5.000% 1,301,125.00 18,076,125.00 18,076,125.00 09/30/2037 17,635,000 5.000% 440,875.00 18,075,875.00 18,075,875.00 214,890,000 135,522,638.89 350,412,638.89 20,598,305.56 329,814,333.33 Note: Final Jan 19, 2017 1:27 pm Prepared by FirstSouthwest (aml) (Finance 7.017 DENTON:2017_ELC-2017_REV) Page 4 FirstSouthwest dP.wisi OrHIROO5kWr" Exhibit 1 Date NET DEBT SERVICE City of Denton, Texas $214,890,000 Utility System Revenue Bonds, Series 2017 (Electric Supported: $225 mm) Tax -Exempt Rates As of 01/19/2017 (AA- / Al) *** Amortized over 20 Years / Cap -I Until Dec. 31, 2018 / 10 Year Call *** *** Final Numbers *** Total Capitalized Net Principal Coupon Interest Debt Service Interest Fund Debt Service Annual Net D/S 06/01/2017 3,680,388.89 3,680,388.89 3,680,388.89 09/30/2017 12/01/2017 5,342,500.00 5,342,500.00 5,342,500.00 06/01/2018 5,342,500.00 5,342,500.00 5,342,500.00 09/30/2018 12/01/2018 5,342,500.00 5,342,500.00 5,342,500.00 06/01/2019 5,342,500.00 5,342,500.00 890,416.67 4,452,083.33 09/30/2019 4,452,083.33 12/01/2019 7,580,000 5.000% 5,342,500.00 12,922,500.00 12,922,500.00 06/01/2020 5,153,000.00 5,153,000.00 5,153,000.00 09/30/2020 18,075,500.00 12/01/2020 7,970,000 5.000% 5,153,000.00 13,123,000.00 13,123,000.00 06/01/2021 4,953,750.00 4,953,750.00 4,953,750.00 09/30/2021 18,076,750.00 12/01/2021 8,375,000 5.000% 4,953,750.00 13,328,750.00 13,328,750.00 06/01/2022 4,744,375.00 4,744,375.00 4,744,375.00 09/30/2022 18,073,125.00 12/01/2022 8,805,000 5.000% 4,744,375.00 13,549,375.00 13,549,375.00 06/01/2023 4,524,250.00 4,524,250.00 4,524,250.00 09/30/2023 18,073,625.00 12/01/2023 9,260,000 5.000% 4,524,250.00 13,784,250.00 13,784,250.00 06/01/2024 4,292,750.00 4,292,750.00 4,292,750.00 09/30/2024 18,077,000.00 12/01/2024 9,735,000 5.000% 4,292,750.00 14,027,750.00 14,027,750.00 06/01/2025 4,049,375.00 4,049,375.00 4,049,375.00 09/30/2025 18,077,125.00 12/01/2025 10,200,000 ** % 4,049,375.00 14,249,375.00 14,249,375.00 06/01/2026 3,824,125.00 3,824,125.00 3,824,125.00 09/30/2026 18,073,500.00 12/01/2026 10,695,000 5.000% 3,824,125.00 14,519,125.00 14,519,125.00 06/01/2027 3,556,750.00 3,556,750.00 3,556,750.00 09/30/2027 18,075,875.00 12/01/2027 11,245,000 5.000% 3,556,750.00 14,801,750.00 14,801,750.00 06/01/2028 3,275,625.00 3,275,625.00 3,275,625.00 09/30/2028 18,077,375.00 12/01/2028 11,820,000 5.000% 3,275,625.00 15,095,625.00 15,095,625.00 06/01/2029 2,980,125.00 2,980,125.00 2,980,125.00 09/30/2029 18,075,750.00 12/01/2029 12,425,000 5.000% 2,980,125.00 15,405,125.00 15,405,125.00 06/01/2030 2,669,500.00 2,669,500.00 2,669,500.00 09/30/2030 18,074,625.00 12/01/2030 13,065,000 5.000% 2,669,500.00 15,734,500.00 15,734,500.00 06/01/2031 2,342,875.00 2,342,875.00 2,342,875.00 09/30/2031 18,077,375.00 12/01/2031 13,735,000 5.000% 2,342,875.00 16,077,875.00 16,077,875.00 06/01/2032 1,999,500.00 1,999,500.00 1,999,500.00 09/30/2032 18,077,375.00 12/01/2032 14,435,000 5.000% 1,999,500.00 16,434,500.00 16,434,500.00 06/01/2033 1,638,625.00 1,638,625.00 1,638,625.00 09/30/2033 18,073,125.00 12/01/2033 15,180,000 5.000% 1,638,625.00 16,818,625.00 16,818,625.00 06/01/2034 1,259,125.00 1,259,125.00 1,259,125.00 09/30/2034 18,077,750.00 12/01/2034 15,955,000 5.000% 1,259,125.00 17,214,125.00 17,214,125.00 06/01/2035 860,250.00 860,250.00 860,250.00 Jan 19, 2017 1:27 pm Prepared by FirstSouthwest (aml) (Finance 7.017 DENTON:2017_ELC-2017_REV) Page 5 FirstSouthwest dP.wisi OrHIROO5kWr" Exhibit 1 Note: Final Jan 19, 2017 1:27 pm Prepared by FirstSouthwest (aml) (Finance 7.017 DENTON:2017_ELC-2017_REV) Page 6 NET DEBT SERVICE City of Denton, Texas $214,890,000 Utility System Revenue Bonds, Series 2017 (Electric Supported: $225 mm) Tax -Exempt Rates As of 01/19/2017 (AA- / Al) *** Amortized over 20 Years / Cap -I Until Dec. 31, 2018 / 10 Year Call *** *** Final Numbers *** Total Capitalized Net Annual Date Principal Coupon Interest Debt Service Interest Fund Debt Service Net D/S 09/30/2035 18,074,375.00 12/01/2035 16,775,000 5.000% 860,250.00 17,635,250.00 17,635,250.00 06/01/2036 440,875.00 440,875.00 440,875.00 09/30/2036 18,076,125.00 12/01/2036 17,635,000 5.000% 440,875.00 18,075,875.00 18,075,875.00 09/30/2037 18,075,875.00 214,890,000 135,522,638.89 350,412,638.89 20,598,305.56 329,814,333.33 329,814,333.33 Note: Final Jan 19, 2017 1:27 pm Prepared by FirstSouthwest (aml) (Finance 7.017 DENTON:2017_ELC-2017_REV) Page 6 X W O O O O O O O O O O O O O O O O O O O 3 0 0 0 0 Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln Ln p 1A 1A 1A 1A Iln n n n n N N N N N N N N N . . . . . . . . . . . . . . . . . . . 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O n. V. N a. ll. l0 00 N. ll. V. . . . I . . . . I� n00 00 Ol Ol M l0 O N N N M M V u1 V1 l0 n N N N N N N N N N N N Ol O N N M V u1 V1 w n 00 Ol O N N M V u1 w N N N N N N N N N N N N M M M M M M M O O O O O O O O O O O O O O O O O O O O1 N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N C O1 C O O. � E O O V m '6 C' 0S `y O 00 (n X w u 0 a Z 00 4, bb m CL m V L iQ l"I N O � N _ el el N M N cr-I v \00 Ln W Ln N o a LQ vi N vi o v c E N N O E r^I M X O N N 0 0 o m o H eq oN NN m z \ I� n c -I G1 O c -I c -I OO N 4, N D O O O O N c -I T rl N M V V E z 0 Q N Q. N N N � ' a O o N pp�, (n N \ LL V 4F 4, m dF 4' N Q >- E E O C O O N L O O wN N X O v HDD a v u N 4, as O c c a` 14N � t CL o o 3 3 O . u 3 m w O Q 3 s L u 0 a Z 00 4, bb m CL First thwest dP.wisl OrHIROO5kWr es Note: Final Exhibit 1 AVERAGE TAKEDOWN City of Denton, Texas $214,890,000 Utility System Revenue Bonds, Series 2017 (Electric Supported: $225 mm) Tax -Exempt Rates As of 01/19/2017 (AA- / Al) *** Amortized over 20 Years / Cap -I Until Dec. 31, 2018 / 10 Year Call *** *** Final Numbers *** Dated Date 01/27/2017 Delivery Date 01/27/2017 Maturity Par Takedown Takedown Bond Component Date Amount $/Bond Amount Serial Bond: 12/01/2019 7,580,000 2.5000 18,950.00 12/01/2020 7,970,000 2.5000 19,925.00 12/01/2021 8,375,000 2.5000 20,937.50 12/01/2022 8,805,000 2.5000 22,012.50 12/01/2023 9,260,000 3.7500 34,725.00 12/01/2024 9,735,000 3.7500 36,506.25 12/01/2025 3,400,000 3.7500 12,750.00 12/01/2025 6,800,000 3.7500 25,500.00 12/01/2026 10,695,000 3.7500 40,106.25 12/01/2027 11,245,000 3.7500 42,168.75 12/01/2028 11,820,000 4.2500 50,235.00 12/01/2029 12,425,000 4.2500 52,806.25 12/01/2030 13,065,000 4.2500 55,526.25 12/01/2031 13,735,000 4.2500 58,373.75 12/01/2032 14,435,000 4.2500 61,348.75 12/01/2033 15,180,000 4.2500 64,515.00 12/01/2034 15,955,000 4.2500 67,808.75 12/01/2035 16,775,000 4.2500 71,293.75 12/01/2036 17,635,000 4.2500 74,948.75 214,890,000 3.8645 830,437.50 Jan 19, 2017 1:27 pm Prepared by FirstSouthwest (aml) (Finance 7.017 DENTON:2017_ELC-2017_REV) Page 9 First thvvest dP.wisl OrHIROO5kWr es Note: Final Exhibit 1 UNDERWRITER'S DISCOUNT City of Denton, Texas $214,890,000 Utility System Revenue Bonds, Series 2017 (Electric Supported: $225 mm) Tax -Exempt Rates As of 01/19/2017 (AA- / Al) *** Amortized over 20 Years / Cap -I Until Dec. 31, 2018 / 10 Year Call *** *** Final Numbers *** Underwriter's Discount $/1000 Amount Average Takedown 3.86448 830,437.50 Underwriters' Counsel 0.40000 85,956.00 Management Fee 0.25000 53,722.50 CUSIP 0.00398 855.50 DALCOMP (Bookrunner & Wire Fees) 0.06930 14,892.36 Day Loan 0.02864 6,154.11 DTC 0.00372 800.00 4.62012 992,817.97 Jan 19, 2017 1:27 pm Prepared by FirstSouthwest (aml) (Finance 7.017 DENTON:2017_ELC-2017_REV) Page 10 First thwest dP.wisl OrHIROO5kWr es Note: Final Exhibit 1 COST OF ISSUANCE City of Denton, Texas $214,890,000 Utility System Revenue Bonds, Series 2017 (Electric Supported: $225 mm) Tax -Exempt Rates As of 01/19/2017 (AA- / Al) *** Amortized over 20 Years / Cap -I Until Dec. 31, 2018 / 10 Year Call *** *** Final Numbers *** Cost of Issuance $/1000 Amount Financial Advisor Fee 0.89542 192,417.50 Bond Counsel Fee 0.94188 202,401.00 Paying Agent Acceptance Fee 0.00163 350.00 Offical Statement Printing & Distribution 0.02792 6,000.00 Fitch Rating Fee 0.39555 85,000.00 S&P Rating Fee 0.31900 68,550.00 Attorney General Fee 0.04421 9,500.00 Other 0.00826 1,773.97 2.63387 565,992.47 Jan 19, 2017 1:27 pm Prepared by FirstSouthwest (aml) (Finance 7.017 DENTON:2017_ELC-2017_REV) Page 11 First thvvest dP.wisl OrHIROO5kWr es Exhibit 1 FORM 8038 STATISTICS City of Denton, Texas $214,890,000 Utility System Revenue Bonds, Series 2017 (Electric Supported: $225 mm) Tax -Exempt Rates As of 01/19/2017 (AA- / Al) *** Amortized over 20 Years / Cap -I Until Dec. 31, 2018 / 10 Year Call *** *** Final Numbers *** Dated Date 01/27/2017 Delivery Date 01/27/2017 Redemption Bond Component Date Principal Coupon Price Issue Price at Maturity Serial Bond: 12/01/2019 7,580,000.00 5.000% 109.767 8,320,338.60 7,580,000.00 12/01/2020 7,970,000.00 5.000% 112.307 8,950,867.90 7,970,000.00 12/01/2021 8,375,000.00 5.000% 114.379 9,579,241.25 8,375,000.00 12/01/2022 8,805,000.00 5.000% 115.928 10,207,460.40 8,805,000.00 12/01/2023 9,260,000.00 5.000% 117.212 10,853,831.20 9,260,000.00 12/01/2024 9,735,000.00 5.000% 118.094 11,496,450.90 9,735,000.00 12/01/2025 3,400,000.00 3.250% 104.861 3,565,274.00 3,400,000.00 12/01/2025 6,800,000.00 5.000% 118.590 8,064,120.00 6,800,000.00 12/01/2026 10,695,000.00 5.000% 119.190 12,747,370.50 10,695,000.00 12/01/2027 11,245,000.00 5.000% 118.244 13,296,537.80 11,245,000.00 12/01/2028 11,820,000.00 5.000% 117.214 13,854,694.80 11,820,000.00 12/01/2029 12,425,000.00 5.000% 116.194 14,437,104.50 12,425,000.00 12/01/2030 13,065,000.00 5.000% 115.734 15,120,647.10 13,065,000.00 12/01/2031 13,735,000.00 5.000% 115.184 15,820,522.40 13,735,000.00 12/01/2032 14,435,000.00 5.000% 114.638 16,547,995.30 14,435,000.00 12/01/2033 15,180,000.00 5.000% 114.095 17,319,621.00 15,180,000.00 12/01/2034 15,955,000.00 5.000% 113.555 18,117,700.25 15,955,000.00 12/01/2035 16,775,000.00 5.000% 113.107 18,973,699.25 16,775,000.00 12/01/2036 17,635,000.00 5.000% 112.751 19,883,638.85 17,635,000.00 214,890,000.00 247,157,116.00 214,890,000.00 Stated Weighted Maturity Interest Issue Redemption Average Date Rate Price at Maturity Maturity Yield Final Maturity 12/01/2036 5.000% 19,883,638.85 17,635,000.00 Entire Issue 247,157,116.00 214,890,000.00 12.6407 2.9961% Proceeds used for accrued interest 0.00 Proceeds used for bond issuance costs (including underwriters' discount) 1,558,810.44 Proceeds used for credit enhancement 0.00 Proceeds allocated to reasonably required reserve or replacement fund 0.00 Note: Final Jan 19, 2017 1:27 pm Prepared by FirstSouthwest (aml) (Finance 7.017 DENTON:2017_ELC-2017_REV) Page 12 First thwest dP.wisl OrHIROO5kWr es Exhibit 1 PROOF OF ARBITRAGE YIELD City of Denton, Texas $214,890,000 Utility System Revenue Bonds, Series 2017 (Electric Supported: $225 mm) Tax -Exempt Rates As of 01/19/2017 (AA- / Al) *** Amortized over 20 Years / Cap -I Until Dec. 31, 2018 / 10 Year Call *** *** Final Numbers *** Present Value to 01/27/2017 Date Debt Service @ 2.9960649979% 06/01/2017 3,680,388.89 3,642,882.18 12/01/2017 5,342,500.00 5,210,007.18 06/01/2018 5,342,500.00 5,133,111.50 12/01/2018 5,342,500.00 5,057,350.75 06/01/2019 5,342,500.00 4,982,708.16 12/01/2019 12,922,500.00 11,874,349.77 06/01/2020 5,153,000.00 4,665,152.18 12/01/2020 13,123,000.00 11, 705,263.04 06/01/2021 4,953,750.00 4,353,359.28 12/01/2021 13, 328,750.00 11, 540,436.18 06/01/2022 4,744,375.00 4,047,195.53 12/01/2022 13, 549,375.00 11, 387,720.96 06/01/2023 4,524,250.00 3,746,334.27 12/01/2023 13, 784,250.00 11, 245,672.92 06/01/2024 4,292,750.00 3,450,486.08 12/01/2024 14,027,750.00 11,109,002.81 06/01/2025 4,049,375.00 3,159,493.26 12/01/2025 14, 249,375.00 10,953,871.15 06/01/2026 3,824,125.00 2,896,318.16 12/01/2026 156,789,125.00 116,996,400.64 308,366,138.89 247,157,116.00 Proceeds Summary Delivery date Par Value Premium (Discount) Target for yield calculation 01/27/2017 214,890,000.00 32,267,116.00 247,157,116.00 Jan 19, 2017 1:27 pm Prepared by FirstSouthwest (aml) (Finance 7.017 DENTON:2017_ELC-2017_REV) Page 13 First thwest dP.wisl OrHIROO5kWr es Exhibit 1 PROOF OF ARBITRAGE YIELD City of Denton, Texas $214,890,000 Utility System Revenue Bonds, Series 2017 (Electric Supported: $225 mm) Tax -Exempt Rates As of 01/19/2017 (AA- / Al) *** Amortized over 20 Years / Cap -I Until Dec. 31, 2018 / 10 Year Call *** *** Final Numbers *** Assumed Call/Computation Dates for Premium Bonds Bond Component Maturity Date Rate Yield Call Date Call Price Yield To Call/Maturity SERIAL 12/01/2027 5.000% 2.860% 12/01/2026 100.000 2.8608749% SERIAL 12/01/2028 5.000% 2.970% 12/01/2026 100.000 2.9708499% SERIAL 12/01/2029 5.000% 3.080% 12/01/2026 100.000 3.0808988% SERIAL 12/01/2030 5.000% 3.130% 12/01/2026 100.000 3.1309065% SERIAL 12/01/2031 5.000% 3.190% 12/01/2026 100.000 3.1910106% SERIAL 12/01/2032 5.000% 3.250% 12/01/2026 100.000 3.2510176% SERIAL 12/01/2033 5.000% 3.310% 12/01/2026 100.000 3.3110346% SERIAL 12/01/2034 5.000% 3.370% 12/01/2026 100.000 3.3710595% SERIAL 12/01/2035 5.000% 3.420% 12/01/2026 100.000 3.4211176% SERIAL 12/01/2036 5.000% 3.460% 12/01/2026 100.000 3.4610653% Refected Call/Computation Dates for Premium Bonds Bond Component Maturity Date Rate Call Yield Date Call Yield To Price Call/Maturity Increase to Yield SERIAL 12/01/2027 5.000% 2.860% 3.0155152% 0.1546404% SERIAL 12/01/2028 5.000% 2.970% 3.2389444% 0.2680945% SERIAL 12/01/2029 5.000% 3.080% 3.4309080% 0.3500092% SERIAL 12/01/2030 5.000% 3.130% 3.5518488% 0.4209423% SERIAL 12/01/2031 5.000% 3.190% 3.6650704% 0.4740598% SERIAL 12/01/2032 5.000% 3.250% 3.7653164% 0.5142988% SERIAL 12/01/2033 5.000% 3.310% 3.8549928% 0.5439583% SERIAL 12/01/2034 5.000% 3.370% 3.9359030% 0.5648436% SERIAL 12/01/2035 5.000% 3.420% 4.0032138% 0.5820963% SERIAL 12/01/2036 5.000% 3.460% 4.0585666% 0.5975013% Note: Final Jan 19, 2017 1:27 pm Prepared by FirstSouthwest (aml) (Finance 7.017 DENTON:2017_ELC-2017_REV) Page 14 Denton, Texas Utility System New Issue Report Rating Outlook Stable Purpose: Bond proceeds will be used to finance the development of new peak power generation facilities, fund capitalized interest and pay the costs of issuance. Final Maturity: Dec. 1, 2036. Key Utility Statistics Fiscal Year Ended 9/30/15 Key Ratingiv System Type Combined Utility Combined Utility System: The city of Denton, TX owns and operates a combined utility NERC Region ERCOT Annual Revenues ($ Mil.) 229.6 system, providing retail electric, water and wastewater services to the city and surrounding Debt Service Coverage (x) 1.65 areas. The service area is characterized by manageable population growth, low unemployment Days Operating Cash 275 E uit /Ca italization °i° 50.7 rates and income levels modestly below the state average. Analysts Rating Sensitivities Matthew Reilly, CFA +1 415 732-7572 Reduction in Leverage: The current rating reflects Fitch's expectation that the utility system matthew.reilly@fitchratings.com will increase funds available for debt service and reduce overall leverage as projected through Rebecca Meyer consistent rate increases, higher electric sales and improved operating margins. Failure to +1 512 215-3733 rebecca.meyer@fitchratings.com achieve the projected reduction in leverage would likely pressure the rating. www.fitchratings.com January 3, 2017 Transitioning Power Supply: The electric system is transitioning toward a greater reliance on renewable energy and away from coal and market purchased energy. The strategy will be supported by the construction and operation of the 220 -MW natural gas-fired Denton Energy Center (DEC). The increased operational risk is mitigated by reduced exposure to market Related Criteria pricing and volatility. U.S. Public Power Rating Criteria (May 2015) Elevated Debt Levels: The system's projected ratio of debt to funds available for debt service Revenue -Supported Rating Criteria (June 2014) is to rise considerably to 11.3x in fiscal 2017, driven in part by planned debt issuance related to the development of the DEC. However, the rating reflects Fitch Ratings' expectation that anticipated rate increases, improvement in financial margins and the relatively rapid amortization of the revenue bonds will all contribute to reduced leverage beginning in fiscal Related Research 2019. Fitch Rates Denton, TX's Utility System Rev Bonds 'A+'; Outlook Stable Strong Liquidity Metrics: Liquidity levels are healthy, with approximately 275 days cash on (December 2016) hand at the end of fiscal 2015, and should remain robust, offsetting to some degree the U.S. Public Power (Peer Study) (June 2016) combined system's increased debt burden. Demonstrated Rate Flexibility: The diversity of revenue from essential electric, water and wastewater services is a credit strength, although the electric system is the largest contributor to overall financial performance. Utility rates can be modified at the discretion of the city council, which has regularly increased rates over the past several years. Analysts Rating Sensitivities Matthew Reilly, CFA +1 415 732-7572 Reduction in Leverage: The current rating reflects Fitch's expectation that the utility system matthew.reilly@fitchratings.com will increase funds available for debt service and reduce overall leverage as projected through Rebecca Meyer consistent rate increases, higher electric sales and improved operating margins. Failure to +1 512 215-3733 rebecca.meyer@fitchratings.com achieve the projected reduction in leverage would likely pressure the rating. www.fitchratings.com January 3, 2017 Rating History The city of Denton is located approximately 35 miles north of the cities of Dallas and Fort Worth Outlook/ and serves as a quickly growing suburb to the greater metropolitan area. Denton provides Rating Action Watch Date electric, water and wastewater services through city -owned utilities. The electric system is the A+ Assigned Stable 12/29/16 largest of the combined utilities and accounts for the majority of the revenues, followed by the water and wastewater systems. Governanceand Managementtrate The utility system is governed by the city council, consisting of six elected council members and the city's mayor. The city council receives and acts upon recommendations and advice provided by the seven -member Public Utilities Board (the board). The board serves as an advisor to the city council and is responsible for reviewing annual budgets, capital improvement plans, system rates and the issuance of debt. The city council has approved all of the board's rate recommendations to date. Strategically, the three utilities — electric, water, and wastewater — are budgeted for and operated on a self-supporting and stand-alone basis. Each of the separate utilities has board - and council -approved financial policies, including liquidity and debt service coverage targets. A brief presentation of the targets by utility is presented in the table below. Liquidity and Debt ServiceCoverage Targets Electric Water Wastewater Liquidity Reserve Target (Days) 60-75' 120-180 100-140 Debt Service Coverage (x) 1.25 1.25 1.25 'Texas Municipal Power Agency debt payments are not included in the city's liquidity reserve calculation. Source: Denton (TX). Texas Municipal Power Agency Denton, along with the cities of Garland, Bryan and Greenville, created the Texas Municipal Power Agency (TMPA) in 1975. Through TMPA, the cities developed the Gibbons Creek Steam Electric Station (GCSES), located in Grimes County, TX. The single -unit, coal-fired plant has a net capacity of 470 MW and burns Powder River Basin coal. TMPA owns the coal plant and provides power to its four members under identical court - validated, take -or -pay power sales contracts (PSCs) that expire in September 2018. The PSCs financially obligate the members to pay certain expenses to TMPA, including its debt service costs, regardless of actual plant operations. The four members recently approved a joint operating agreement (JOA), TMPA ParticipationShares effective September 2016. The JOA city establishes the framework for how Garland Denton TMPA and its assets and liabilities are Bryan to be managed, regardless of whether Greenville the PSCs are extended beyond Source: Denton (TX). September 2018. TMPA's assets and operations are divided into three business lines under the JOA: generation, transmission and mining Bryan agreed to continue as TMPA members along all three Share 47.0 21.3 21.7 10.0 Denton, Garland and business lines after Denton, Texas 2 January 3, 2017 gs September 2018. Greenville chose to continue as a transmission and mining member, but opted not to continue as a generation member. The JOA allocates costs, ownership interests, decommissioning and remediation responsibilities to members based on their participation share. Denton's participation share is 21.3%. E �s The utilities serve an area characterized by strong employment gains, a low unemployment rate, a growing workforce and below-average income levels. The city is known for its institutions of higher education and regionally prominent medical sector. Denton is home to the University of North Texas and Texas Woman's University, with combined enrollment exceeding 48,500. The city's growing heath care facilities serve north Texas and southern Oklahoma. These institutions include Columbia Medical Center Denton, Texas Health Presbyterian Hospital and The Heart Hospital Baylor Denton. Electric System Denton's electric system serves an approximately 60 -square -mile, single certified area within the city of Denton's city limits and an additional 53 -square -mile area that is multiple certified outside the city's boundaries. The city has not opted in to retail competition, so its customers in the single certified area are generally unable to change electric providers. However, the system does face competition with respect to new customers who move into the multiple certified area. Approximately 5.5% of Denton's electric customers reside in the multiple -certified area. The electric system served approximately 51,085 customers in fiscal 2016. The customer base is largely residential, comprising approximately 88% of total customers. However, commercial and industrial customers drive the majority of total MWh sales, accounting for approximately 64% of total MWh sold in fiscal 2016. All system sales are retail, with no exposure to wholesale ma rkets. Customer concentration is moderate, with the top 10 ratepayers providing approximately 18% of electric revenues and 28% of total MWh sales in fiscal 2016. The largest customer accounted for 9% of MWh sales and 4.6% of electric revenues. The diversity of the pledged revenues from the combined utility systems further mitigates concentration risks. Annual MWh sales tend to fluctuate with weather conditions, particularly in response to summertime temperatures when the system experiences its peak demand. The graph below shows the annual variation in MWh sales during 2011-2016. MWh Sales Trends — 2012-2016 (MWh) 1,480,000 1,440,000 1,400,000 1,360,000 1,320,000 sommm Total Retail Sales----YoY Change in Retail Sales 2012 2013 2014 2015 2016 Source: Denton (TX), Fitch. 4.0 2.0 0.0 (2.0) (4.0) Denton, Texas 3 January 3, 2017 gs Water System The water system provides retail water service to a growing customer base within the city and sells raw and treated water wholesale to the Upper Trinity Regional Water District (UTRWD) for resale to two of its customer cities. Wholesale sales comprised less than 2% of total gallons sold in fiscal 2015. The water system's top 10 customers reflect relatively stable entities, including the University of North Texas, the local school district and local health centers and hospitals. In fiscal 2016, the top 10 customers comprised approximately 10% of water revenues. Wastewater System The wastewater system provides retail wastewater collection and treatment service to a growing customer base within the city and to four wholesale customers. The four wholesale customers — the cities of Corinth, Krum, Argyle and the Lake City Municipal Authority — made up less than 1 % of the wastewater system average volume in fiscal 2015. Electric System Denton's electric system is undergoing a significant change in its power supply and operational profile. The system has historically relied on GCSES and market purchases to provide the bulk of the system's power supply. However, under the city's Renewable Denton Plan (RDP), renewable energy is expected to increase to approximately 70% of the system's power supply, supported by the DEC, a newly built, directly owned 220 -MW natural gas-fired peaking plant. Fitch views the transition as presenting some additional operational risks, as the system has historically not owned or operated generation resources. However, these risks are offset to some degree by the contracting of renewable energy resources at generally fixed rates for the bulk of the system's power supply, decreasing the system's exposure to potentially volatile market pricing. Denton, Texas 4 January 3, 2017 gs Gibbons Creek Steam Electric Station Denton's primary source of power over the past decade has been TMPA's 470 -MW GCSES. While the plant's operational availability remains sound, its competitive position has eroded over the past few years as low natural gas prices and a significant increase in wind generation in ERCOT have combined to reduce market power prices. TMPA's decision in fiscal 2016 to place GCSES in reserve shutdown for a little over a month following a scheduled outage reflected the change in market dynamics. TMPA members have authorized a potential sale of GCSES, and an Gibbons Creek OperatingStatistics agreement has been reached with two (%) potential buyers. The buyers are Fiscal Year Availability Capacity Factor 2015 79.9 55.3 currently completing their due 2016 84.5 38.8 diligence, with a signing of the sales Source: TMPA. agreement expected in early 2017. The purchase price under the two sales agreements is $57.5 million for GCSES. The purchaser for GCSES has also agreed to post $35 million towards an environmental escrow and a letter of credit for $25 million for environmental purposes. A related transaction to a separate buyer includes the sale of approximately 25% of TMPA's transmission assets for the price of $71.5 million. Fitch views the potential sale as a credit positive, but insufficient on its own to materially affect the current rating. Benefits from the potential transaction include the use of the proceeds to pay down a portion of TMPA's outstanding debt, reducing Denton's obligations by a modest amount. More significantly, the sale of GCSES would eliminate Denton's and other member cities' exposure to decommissioning and other environmental liabilities, allowing for potentially significant future savings. Failure to complete the sale would be unlikely to affect the current rating, as TMPA would retain the option to pursue other sales opportunities while continuing to run the plant at the reduced levels of the past few years. Renewable Denton Plan and Denton Energy Center The city's RDP calls for increasing renewables as a percentage of the city's power supply to 70% by 2019. The plan outlines the renewable resource balance as 52% from wind, 17% from solar and 1% from locally owned landfill gas. Wind and solar resources are expected to be secured under long-term power purchase agreements at generally fixed prices. Wind energy supplied approximately 10% of system needs in fiscal 2016. Negotiations for additional resources are ongoing, with the expectation that most of the needed resources will be secured under contract by the end of 2017. The RDP also calls for the development and operation of the DEC, a 220 -MW natural gas-fired electric generation facility consisting of 12 separate reciprocating internal combustion engines. The DEC is designed to economically supply power to firm up intermittent wind and solar resources. In addition, the DEC will act as a physical hedge against high market prices, with the DEC utilized when cheaper than purchasing power from the market and vice versa, effectively hedging against the risk of high peak power prices. Management estimates that the DEC will supply approximately 13% of the system's power needs. The RDP projects that short-term purchased power will contribute approximately 17% of the system's energy needs. Management will continue to hedge the system's exposure to potentially volatile market prices by securing needed supply three to six months ahead of time and layering contracts. Denton, Texas 5 January 3, 2017 gs Water System The city's water system consists of two water treatment plants, 618 miles of water mains, 14 million gallons of ground storage, and 11 million gallons of elevated storage. The system provides water to all customers within the city of Denton and to the UTRWD for resale to the cities of Sanger (population 7,601) and Krum (population 4,919). Denton's water system has sufficient water supply to meet projected needs. The city has a combined 24.62 million gallons per day (MGD) of available surface water from the Ray Roberts Reservoir and the Lewisville Reservoir, which is adequate to meet the city's retail and wholesale treated water volume of approximately 17.26 MGD (fiscal 2016). Likewise, the systems treatment capacity is viewed as adequate to meet demand. The system's two treatment plants provide 48.75 MGD of treatment and pumping capacity, providing a significant cushion relative to the maximum volume pumped to date of 37.52 MGD in 2011. Wastewater System The city's wastewater system provides retail wastewater collection and treatment to all customers within the city and to four wholesale customers. The system consists of 521 miles of gravity wastewater lines, 25 miles of force mains and 27 lift stations. The system's total permitted treatment capacity is 21 MGD, which is sufficient to meet the average demand of 16.74 MGD (2016). The four wholesale customers accounted for approximately 0.89 MGD of treatment volume in 2016. Cost and Rate Structure The city council has the authority to establish and modify rates for each of the utility systems without state or federal oversight. Regular rate increases over the past several years have demonstrated the council's willingness to increase rates as necessary. A brief history of recent base rate increases by utility is provided in the table below. Please note that the electric system rate changes based on the energy cost adjustor are not reflected in the table. Average tail Rate Increase y Utility System Fiscal Year Electric Water Wastewater 2017E 4.5 5.0 2.0 2016 4.5 5.0 2.0 2015 4.7 3.0 6.0 2014 2.5 — 9.0 2013 9.0 E — Expected. Source: Denton (TX). Electric Rate Structure The electric system's rate structure is viewed as a credit positive, as it provides the utility with the flexibility to recapture potentially volatile energy costs in a timely manner. The structure includes a fixed charge, a volumetric charge, an Energy Cost Adjustment Factor (ECA) and a Transmission Cost Recovery Factor (TCR). The ECA is designed to capture and pass through to customers the utility's fuel and purchased power costs. The ECA is adjusted on a quarterly basis to stay within a $5 million range. The Denton, Texas 6 January 3, 2017 gs general manager of the electric system recommends adjustments to the board on a quarterly basis, when the $5 million threshold is projected to be breached. The electric utility also has a TCR that is designed to capture and pass through to customers the utility's net transmission costs. This has provided another valuable means for capturing increasing fixed costs following ERCOT's build -out of its transmission system. Financial cial rf r arc and Legal Provisions The financial performance of the combined utility system is largely driven by the electric system, which accounted for an average of 48.7% of the combined system's net operating revenues during fiscal 2011-2016. The water system and the wastewater system contributed approximately 30.6% and 20.8%, respectively. A breakdown of the combined system's net operating revenues by utility is provided in the chart below. Combined Utility System Net Operating Revenue by Utility (oho) Electric mWater Wastewater 100 80 60 40 20 0 2011 2012 2013 2014 2015 2016 Average (2011-2016) Source: Denton (TX). As shown in the chart, the electric system's financial performance was noticeably weaker in fiscals 2013 and 2014. This was largely driven by the ongoing but temporary period of increased TMPA obligations, including TMPA debt service costs, that runs through fiscal 2018. Denton's payment of its respective share of TMPA's O&M and debt service costs is recorded as a purchased power expense. Once the final payment on TMPA's generation debt is made in fiscal 2018, Denton expects purchased power costs will decline by approximately $33 million. However, DEC operations are expected to increase operation expenses by $7 million— $9 million, offsetting some of the expected savings. The financial performance of the combined utility system will become increasingly dependent on the electric system after 2018. With the reduction in TMPA obligations that begins in fiscal 2019, Denton's electric system will contribute approximately 75% of the projected net operating revenues for the combined utility system. Recent Financial Metrics The financial metrics of the combined utility system are relatively low but adequate for the rating. Fiscal 2015 debt service coverage and coverage of full obligations was 1.65x and 1.14x, respectively. Preliminary and unaudited financial reports for fiscal 2016 reflect Fitch -calculated coverage metrics of approximately 1.70x and 1.1Ox, respectively. Liquidity levels for the combined utility system are healthy, with approximately $119.8 million in unrestricted cash and investments, or 275 days cash on hand, at the end of fiscal 2015. Liquidity levels are expected to increase in fiscal 2016 to approximately $158.6 million Denton, Texas i January 3, 2017 gs (unaudited), due in part to the release of certain bond funds following recent refundings. A portion of the increased reserves are expected to be spent on capital projects in fiscal 2017. The combined system's cash balances have declined moderately over the past several years as funds have been used for capital needs and to meet increased TMPA obligations. Additional draws are expected, including a planned $17 million use of reserves in fiscal 2017, although cash balances are projected to stabilize at still -sound levels thereafter. Financial Outlook Projected financial metrics are adequate for the rating and relatively consistent with recent performance. Fitch -calculated all -in debt service coverage ratios are projected to remain in the 1.60x -1.90x range through fiscal 2021, with the notable exception of fiscal 2018 when coverage is expected to decline to a low of 1.19x. Fiscal 2018 is the final year of elevated TMPA costs for the electric system as the outstanding generation debt is repaid. Increasing debt service costs through 2021 will keep coverage levels relatively low over the period despite improving financial margins driven by lower electric system costs after 2018. Management's financial projections are based on several assumptions, including 2.5% annual electric load growth, 4.5% annual electric rate increases in fiscals 2017-2019 and the realization of approximately $25 million in non -contracted wholesale electric revenue beginning in fiscal 2019. An inability to achieve these assumptions could result in weaker -than -expected financial performance. General Fund Transfers Each of the utility systems pays three separate transfer amounts to the city's general fund. The transfers include an indirect cost allocation, a "rate of return" to the city authorized in the city charter and a payment in lieu of franchise taxes. While the indirect cost allocation transfer is considered an operating expense by the utilities, the rate of return and payment in lieu of franchise taxes transfers are subordinate to debt service per the city ordinance authorizing the revenue bonds. The transfer amounts have been relatively stable over the past several years. The indirect cost allocation amount is established by an independent consultant. The rate of return and payment in lieu of franchise taxes are set at 3.5% and 5%, respectively, of each utility system's Debt Profile The senior lien revenue bonds are expected to comprise approximately 25% of the combined utility system's total outstanding debt in 2017. The majority of the debt is in the form of general obligation (GO) bonds and certificates of obligation (CO) that are issued and secured by the general government, but actually paid from the underlying utility systems. All of the outstanding debt is fixed-rate. Fitch's coverage and debt calculations include the GO and CO bonds and the respective debt service paid by the utility systems. The combined utility system's debt metrics are elevated, projected at 11.3x debt/FADS in fiscal 2017. The rating incorporates the combined utility system's plans for around $343 million in additional GO bonds and a potential issuance of $40 million in revenue bonds over the next five years. The relatively high debt load reflects the systems' significant investment in additional generation, transmission and other investments. The relatively quick repayment period, including the 20 -year amortization rate on the revenue bonds, together with improved operating Denton, Texas 8 January 3, 2017 gs earnings is expected to reduce the elevated debt/FADS ratio beginning in 2019 and restore future debt capacity, if needed. Legal Provisions The bond's legal provisions are viewed as permissive but adequate for the rating. The bonds are payable from a first lien on the net revenues of the combined utility system. Operating costs are defined in the ordinance to include transfers of indirect costs, but exclude return on investment and payment in lieu of franchise tax transfers. The bonds feature a sum -sufficient rate covenant and do not have a debt service reserve fund. Denton, Texas 9 January 3, 2017 gs Financial y ---- Denton J) ($000, Audited Years Ended Sept. 30) 2011 2012 2013 2014 2015 Debt Service Coverage (x) Debt Service Coverage 4.6 1.9 1.3 1.3 1.7 Adjusted DSC (Including Purchased Power Adjustment as D/S) 2.3 1.5 1.2 1.1 1.4 Adjusted DSC (Including Transfer/PILOT/Dividend as O&M Expense) 3.5 1.5 0.9 0.8 1.3 Coverage of Full Obligations (PP as D/S and Transfer/PILOT/Dividend as O&M Expense) 2.0 1.3 0.9 0.9 1.1 Liquidity Metrics Days Cash and Investments on Hand 415.1 451.3 337.9 283.5 275.4 Days Liquidity on Hand 415.1 451.3 337.9 283.5 275.4 Leverage Metrics Debt/FADS (x) 5.7 5.8 8.4 9.4 7.1 Adjusted Debt (Including PP Adj.)/Adjusted FADS (Including PP Adj.) (x) 6.3 6.4 8.3 8.8 7.4 Debt/Total Retail Customers 3,443.5 3,520.5 3,621.2 4,097.8 4,466.5 Net Debt/Net Capital Assets (%) 43.7 41.1 44.0 51.3 53.5 Equity/Capitalization (%) 54.9 55.5 54.9 52.2 50.7 Debt/Capitalization (%) 45.1 44.5 45.1 47.8 49.3 Adjusted Debt/Capitalization (%) 55.5 54.7 57.0 59.1 59.1 Other Financial & Operating Metrics Operating Margin (%) 25.2 24.5 14.9 14.3 21.7 Retail Electric Revenue/kWh (Cents/kWh) 9.1 9.5 9.7 10.4 11.3 Transfer and PILOT and Tax/Total Operating Revenue 0.3 0.4 0.4 0.5 0.7 Capex/Depreciation and Amortization (%) 215.7 242.7 314.6 389.7 411.2 Debt Service/Cash Operating Expenses (%) 10.4 21.6 19.8 19.9 21.6 Income Statement Total Operating Revenue 186,359 189,645 197,126 208,666 229,583 Total Operating Expense 139,416 143,145 167,855 178,900 179,740 Operating Income 46,943 46,500 29,272 29,766 49,844 Adjustment to Operating Income for Deferred Revenue 18,286 19,236 18,733 19,784 22,478 Funds Available for Debt Service 65,229 65,736 48,004 49,550 72,322 Total Annual Debt Service 14,271 34,484 37,143 39,756 43,722 Balance Sheet Unrestricted Funds (Cash and Liquid Investments) 139,272 155,025 138,938 124,553 119,781 Restricted Funds 95,370 98,204 107,779 129,929 142,112 Total Net Assets/Members Equity 447,800 476,564 492,549 505,466 526,301 Total Debt 368,396 382,703 403,996 463,410 512,604 Cash Flow Statement FCF (FADS - Transfer and PILOT - Total Annual Debt Service) 36,014 16,094 (4,572) (6,516) 10,742 Capex 36,556 43,101 55,831 72,319 86,200 FCF Less Capex (543) (27,007) (60,402) (78,836) (75,458) DSC - Debt service coverage. D/S - Debt service. PP - Purchased power. FADS - Funds available for debt service. PILOT - Payment in lieu of taxes. Source: Denton (TX), Fitch. Denton, Texas Ili January 3, 2017 The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTPS:#FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT VWWV.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. 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Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001. Denton, Texas 11 January 3, 2017 Ratings Exhibit 1 Primary Credit Analyst: Jeffrey M Panger, New York (1) 212-438-2076; jeff.panger@spglobal.com Secondary Contact: Scott W Sagen, New York (1) 212-438-0272; scott.sagen@spglobal.com Table Of Contents ............................. ........ WWW.STANDARDANDPOORS.COM/RATINGSDIRECT DECEMBER 18, 2016 1 1776195 1302491962 Exhibit 1 US$224.05 mil util sys revbnds ser 2017 dtd 01/01/2017 due 12/01/2036 Long Term Rating AA -/Stable New s S&P Global Ratings has assigned its 'AA-' rating to Denton, Texas' utility system revenue bonds, series 2017. The outlook is stable. The rating reflects our assessment of the following credit strengths: • An expanding and diverse service area economy with good access to employment throughout the strong and diverse Dallas -Fort Worth metropolitan area; • Strong liquidity, measuring 250 days of operating expenses ($120 million), roughly half of which is designated for rate -stabilization, built up to mitigate the need for interim rate increases as Denton transitions to a lower-cost power supply; and • A transition to what we would view as a more favorable power portfolio, from a coal -heavy supply to one based on wind and solar energy firmed up through owned gas-fired generation and market purchases. We expect that, in 2018, power costs will be lower, enabling the utility to post stronger cover metrics and build liquidity. The rating also reflects what we view as the following credit risks: • The transition creates some uncertainties. The utility has a take -or -pay contract with the Texas Municipal Power Agency (TMPA) and, as such, participates in the Gibbon's Creek coal project, which accounted for 26% of Denton's 2015 energy needs (and more in previous years). The contract expires in 2018, but the TMPA is selling the unit and a portion of related transmission before then. Denton expects to replace it with wind and solar purchased power agreements (PDAs), boosting renewable generation to 70% of energy needs (from the current 40%), and quick start gas units, with the later firming up supply and providing economic dispatch optionality when more advantageous than market purchases. While management expects the power supply change will result in lower energy and fixed costs, there are uncertainties related to the fact the units have not yet been built, coupled with potential volatility associated with a greater reliance on market purchases or gas-fired generation. • Coverage of fixed costs have been just adequate over the past three years, supplemented by draws on rate -stabilization reserves. Although management projects solid coverage in 2016, we expect coverage in 2017 and 2018 at levels we would characterize as weak for the rating; however, the utility's strong liquidity, including a large rate -stabilization reserve that provides a cushion during the transition, mitigates the risk. • Denton anticipates a sizable 75% increase in utility -supported debt by 2020 to meet combined system capital needs. Bond proceeds will finance the construction of quick start gas-fired units that will firm up delivery of renewable energy as part of the utility's Renewable Denton plan. The combined utilities' business risk profile of '4' is better than average, reflecting our assessment of rate setting WWW.STANDARDANDPOORS.COM/RATINGSDIRECT DECEMBER 19, 2016 2 1776195 1302491962 Exhibit 1 Summary: Denton, Texas; Combined Utility autonomy and a residential service area exhibiting credit supportive demographics. We assign business risk profiles on a scale from '1' to '10', '1' being the strongest. A first -lien pledge of net revenues of Denton's combined electric, water and sewer systems secure the bonds. The electric system dominates revenues, typically accounting for about three-quarters of the total, and about half of the net revenue available to service debt. Denton's power supply includes firm power purchases of wind energy, which accounts for about 40% of energy needs; market purchases (30%); and the city's 21.3% participation share in the Gibbons Creek coal plant. We understand that the TMPA (and its members) are selling the plant for $57.5 million, with the buyer assuming all decommissioning liabilities. The agency is also selling one-quarter if its transmission assets for $71.5 million, to a separate buyer. The TMPA expects to use the proceeds pay down about one-quarter of its $473 million debt. The remaining portion attributable to generation will be serviced by the respective members though its 2018 final maturity; the portion that is attributable to transmission will be serviced from transmission revenue from the Electric Reliability Council of Texas (ERCOT), beginning in 2019. The utility expects that, in replacing the TMPA power, it will bring renewables to 70% of energy needs (including 52% wind and 17% solar). Given the intermittent nature of renewable energy, Denton is issuing the 2017 bonds to finance the construction of 12 reciprocating combustion turbines (for 220 megawatts) which will be used to firm up delivery when economically advantageous relative to market purchases. We understand that Denton has no additional capacity needs in the foreseeable future for its water or wastewater systems. According to the U.S. Department of Energy's Energy Information Administration, Denton's electric rates were 113% of the state average in 2015, the most recent year of available comparative information, although residential rates are 4% below the state average. With a portion of customers (about 20%) in areas that are multiply certified, the utility is somewhat exposed to price -sensitive customer switching, although this has historically not been a problem for it. Combined water and sewer bills is also high, at $86 per month for a 7,500 gallon residential customer, a function of 8% average annual wastewater rate increases over the last three years. Management projects 4.5% electric rate increases in 2017 and 2018, and small annual water and wastewater rate increases through 2021. Denton has posted inconsistent financial results from recurring revenue, but has stabilized financial operations by using rate -stabilization reserves in 2013 and 2014 to meet higher fixed costs (direct debt and fixed cost payments to the TMPA). Not including the reserves, fixed cost coverage was 0.97x in 2013, 1.27x in 2014, and 1.20x in 2015. Including them, fixed cost coverage was 1.2x in 2013 and 1.54x in 2014 (management did not use stabilization reserves in 2015). Financial operations for 2016 (11 months, year-to-date) have been solid; including a modest amount of rate -stabilization reserves, the utility projects 1.38x coverage of fixed costs, which we consider solid at this rating. However, the 2017 budget suggests much thinner margins (due to higher operating and personnel costs, as well has higher purchased power expenses), producing 1.12x fixed cost coverage. For 2018, the utility projects 1.2x coverage with the use of $4 million in stabilization reserves, neither of which are consistent with the rating. Nevertheless, the liquidity from the significant level of available rate -stabilization reserves mitigates the risk. As the utility transitions to a lower-cost power supply with lower fixed costs, we expect fixed cost coverage to rise into the 1.4x range by 2019, and the utility expects to dedicate $50 million in surplus revenue toward replenishing and enhancing rate -stabilization reserves to nearly $93 million by fiscal year-end 2020. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT DECEMBER 19, 2015 3 Exhibit 1 ,Summary: Denton, Texas; Combined Utility Debt was 49% of total capitalization in 2015, which we believe is fairly high for a utility with no generation assets on its balance sheet. Denton is fairly leveraged and we anticipate that debt ratios will weaken over the next five years as it pursues a sizable, $614 million five-year capital plan, the bulk of which it expects to finance with utility -supported debt. We anticipate a 75% increase in utility -supported debt by 2020, so we expect the debt ratio will weaken. Denton benefits from its location in the diverse Dallas -Fort Worth Metroplex. Customer growth for the combined utility system has averaged 2% over the past four years, which we consider solid. In our opinion, concentration among customers is modest, with the 10 leading customers accounting for about 22% of total combined system revenue. Residential customers account for nearly 38% of revenue, and commercial customers account for the bulk of the rest. Demographics are good, with median household effective buying incomes at 91% of the nation and unemployment low at 3.4% in 2015. The stable outlook reflects our view of Denton's strong liquidity, supplementing uneven coverage metrics as the utility transitions to a lower-cost power supply. Upside scenario We do not expect to raise the rating over the next two years given Denton's financial forecast and capital program. We could lower the rating if the utility fails to meet projected metrics for coverage and liquidity. Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.standardandpoors.com for further information. 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To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion, S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof. S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process. S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the tight to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www,ratingsdirect.com and www,globalcreditportal.com (subscription) and www.spcapitaliq.com (subscription) and may be distributed through other means, including via S&P publications and third -party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees. DECEMBER 19, 2016 5 1776195 1302491962 City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com , DENTON Legislation Text File #: ID 17-108, Version: 1 Agenda Information Sheet DEPARTMENT: Human Resources CM/ ACM: Bryan Langley Date: January 24, 2017 SUBJECT Hold a discussion and give staff direction on the recruitment process for a new City Attorney. BACKGROUND On January 6, 2017, city attorney Anita Burgess submitted her notice of retirement to be effective in February of 2017. In a subsequent meeting with the Mayor, Burgess stated she would like her last day in the office to be on February 10, 2017, but would like to take her accrued vacation through March 31, 2017, if the Council is comfortable with such an arrangement. During this time, she will be available to assist Council as needed. With the impending vacancy, the Council needs to determine if it wants to conduct a nationwide search. If so, does Council desire to contract with an executive recruitment firm? At the request of the Agenda Committee, staff requested a proposal from Waters & Company. The City recently contracted with Waters & Company to conduct the search for the City Manager as well as the City Auditor. OPTIONS Contract with an executive recruitment firm to conduct the search; conduct the search in-house with the assistance of the Human Resources staff, or forego a search and appoint from within. FISCAL INFORMATION Waters & Company quoted an all-inclusive professional fee of $21,000. This fee reflects a discount from the fee of the City Manager process ($24,500) and the City Auditor process ($21,500). Additional work specifically requested by the City which is outside of the scope of this project will be invoiced at the hourly rate of $220 plus expenses. STRATEGIC PLAN RELATIONSHIP The City of Denton's Strategic Plan is an action -oriented road map that will help the City achieve its vision. The foundation for the plan is the five long-term Key Focus Areas (KFA): Organizational Excellence; Public Infrastructure; Economic Development; Safe, Livable, and Family -Friendly Community; and Sustainability and City of Denton Page 1 of 2 Printed on 1/20/2017 povveied by I_egivt9i IN File M ID 17-108, Version: 1 Environmental Stewardship. While individual items may support multiple KFAs, this specific City Council agenda item contributes most directly to the following KFA and goal: Related Key Focus Area: Organizational Excellence Related Goal: 1.2 Develop a high-performance work force EXHIBITS Exhibit 1 - Proposal from Waters & Company Respectfully submitted: Carla Romine Director of Human Resources City of Denton Page 2 of 2 Printed on 1/20/2017 povveied by I_egist9i I;, City of Denton, TX Proposal to Provide Executive Recruitment Services January 18, 2017 CI Waters & ,Comp any Table of Contents LETTER OF TRANSMITTAL 1 GENERAL INFORMATION....................................................................1 11 RESPONSE TO SCOPE OF WORK ........................................................ 2 111 PROPOSED COSTS............................................................................ 8 IV FIRM EXPERIENCE............................................................................. 9 V RECRUITMENT PROJECT TEAM.........................................................10 SAMPLE BROCHURE........................................................................APPENDIX 1 1 285 !p it f lay Road ul e 344 -eI ` 72 81-1`9K Fax 972-481-1,951 `,h`",h`"`,h`. `,h`ci; t`�.-C) i'%: G ci:"'•Y. �C) i'i LETTER OF TRANSMITTAL January 18, 2017 Ms. Carla Romine-Haggmark Director of Human Resources City of Denton City Hall East 601 East Hickory Street Denton, TX 76205 Re: Request for Proposal to Provide Executive Recruitment Services Dear Ms. Romine-Haggmark, We appreciate the opportunity to submit our proposal for executive recruitment services for the City of Denton's next City Attorney. Our extensive experience in providing executive recruitment services to cities, counties and other public sector organizations nationwide will be beneficial for this recruitment and allow us to find the ideal candidates for the City of Denton. We know that you have options for using other recruitment firms. However, we believe that our approach sets us apart from our competitors in the following unique ways: • Management/Leadership Style Assessment Analysis completed by the candidates to determine if a candidate's management style matches the approved management/leadership style profile for the ideal candidate; Video candidate interviews through a proprietary system will be made available to the Mayor and City Council to assist in the selection process; and Utilization of a proprietary online application system exclusively licensed to Waters & Company, a Springsted Company (W&C) to facilitate talent management. The system has been designed by W&C to customize applicant flow and tracking. It allows ease of communication with applicants and the ability to conduct database inquiries for candidates based on characteristics important to the City such as geographic location and specific experience, expertise and qualifications. City of Denton, TX January 18, 2017 Page 2 The proposal document will provide you the details about our approach, expertise, client references and pricing for these executive recruitments. If you have any questions, please contact either one of us for additional information: Chuck Rohre, Senior Vice President 214-608-7477 1 711 f I'll I I Miguel Ozuna, Vice President 214-842-6478 crohre 7a waters -coin any -coin mozuna Rrm Wormafion Waters & Company, a Springsted Company 14285 Midway Road, Suite 340 Addison, Texas 75001 Our Team would consider it a professional privilege to provide these services to the City of Denton. Respectfully submitted, Chuck Rohre, Senior Vice President Consultant SM1 Miguel Ozuna, Vice President Consultant City of Denton, TX Proposal to Provide Executive Recruitment Services Waters & Company (W&C) recently merged with Springsted Incorporated, establishing one of the largest public sector executive recruitment and organizational management firms in the United States. Springsted Incorporated, the parent corporation, is a WBE. Three employee -owners lead the firms and their 70 -member staff. Our corporate office is located in Saint Paul, Minnesota, with regional offices located in Dallas, Texas; Milwaukee, Wisconsin; Des Moines, Iowa; Kansas City, Missouri; Richmond, Virginia; and Denver, Colorado. W&C has a team of seven recruitment consultants available to meet your executive recruitment needs. Each consultant assigned to this recruitment has experience working with cities and the many different disciplines that comprise the City of Denton organization. Our consultants bring an experienced, participatory and energetic perspective to each engagement; our unique approach and personal touch are reflected in our internal standard to provide outstanding services that exceed the City's expectations. Since 2010 our combined consultant team has conducted more than 475 executive recruitments. The W&C Recruitment Project Team will partner with the Mayor, City Council and designated staff as your technical advisor to ensure that the recruitment process for your next City Attorney is conducted in a thorough and professional manner. Our objective is to generate high-quality candidates and assist you with the screening and evaluation of these candidates. We have structured the W&C Recruitment Project Team to draw upon W&C's and Springsted's 50 -plus years of service to the public sector and to leverage W&C's experience and capacity to focus nationwide to find the most qualified candidates. Waters & Company, a Springsted Company 14285 Midway Road, Suite 340 Addison, Texas 75254 Office: 972-481-1950 Fax: 972-481-1951 Respectfully submitted, Rollie Waters, Executive Vice President Consultant City of Denton, TX. Proposal to Provide Executive Recruitment Services. Task I: Recruitment Brochure Development and Advertising The development of a comprehensive recruitment brochure that includes a profile of the ideal candidate is an important first step in the recruitment process. This profile includes the required academic training, professional experience, leadership, management and personal characteristics related to the success of the candidates in the positions of City Attorney. The recruitment brochures will also have a profile that captures the essence of the City as a highly -attractive venue for the successful candidate to live and work. To prepare the recruitment brochure, the Recruitment Co -Project Team Leaders will come on site to meet with the Mayor, City Council and designated staff to discuss the required background, professional experience and management and leadership characteristics for your City Auditor position. We meet individually (or collectively depending upon your preference) with the Mayor and City Council to broaden our understanding of the positions' leadership and management requirements, current issues, strategic priorities and to identify expectations for the City Attorney. [See example of a recruitment brochure in Appendix I.] The Recruitment Project Team will also work with the City of Denton to develop an advertising and marketing strategy for the recruitment to notify potential candidates about the vacancy and conduct an open recruitment that encourages applications from a talented and diverse pool of candidates. Our Team will place ads in appropriate professional publications, websites and local print media, if required. Additionally, W&C has a highly -accessed website that has a special location attracting many potential candidates to upload their resumes. The aggressive advertising and marketing campaign for top talent will include national, state, regional and local elements as determined during our initial meetings with the City's representatives. Our customized mailing list, selected from our extensive database and contacts collected at appropriate public sector conferences, will be utilized to further promote the position. C l Wates & I"'om an, City of Denton, TX. Proposal to Provide Executive Recruitment Services. Project Milestone Deliverables Estimated Duration . Onsite interview with the City. . W&C will receive information regarding Position profile and recruitment the City's budgets, organizational charts, brochure development. images, logos, etc. 2 Weeks . Develop draft documents (Recruitment Brochure, Advertisement, Marketing Letter and Timeline). Approve brochure, commence . Brochure sent to the City for final approval. advertising and distribute 1 Week marketing letter. • Commence advertising and distribution of recruitment brochure. Task II: Execution of Recruitment Strategy and Identification of Quality Candidates Utilizing the information developed in Task I, W&C will identify and reach out to individuals who will be outstanding candidates for the positions of City Attorney. Often, well-qualified candidates are not actively seeking new employment and will not necessarily respond to an advertisement. However, if a potential candidate is presented with the opportunity directly and in the proper manner, he or she may apply. We take pride in our ability to locate highly qualified candidates across the nation based on the professional contacts and relationships we have developed and maintained over many years. These efforts will be supplemented by the creation of an appropriate database utilizing our extensive, interactive applicant database for the City Attorney position. This will provide the W&C Team with the ability to customize applicant flow and tracking, communication with applicants and conduct database inquiries for candidates based on characteristics important to the City such as geographic location, particular experience, expertise and credentials. During this part of the process the Recruitment Project Team will work with the Mayor, City Council and designated staff to reach consensus on the leadership and management style for the ideal candidates. Our research will determine the key competencies, work values and leadership/management style for the position and match the candidates to each attribute. Each candidate submitting a resume is sent a timely acknowledgement by our Team, including an approximate schedule for the recruitment. Throughout the recruitment process, communications are maintained with each candidate regarding information about the recruitment progress and their status in the process. We take pride in the many complimentary comments made by candidates regarding the level of communication and the professional manner in which they are treated during our recruitments. Project Milestone Deliverables Estimated Duration . Online data collection and profile development. . Development of interactive searchable applicant Execution of recruitment database for recruitment of the City Attorney. strategy and candidate • W&C performs direct outreach to prospective 4-5 Weeks outreach. candidates identified in the recruitment strategy. . Utilization of extensive applicant database to identify applications and review applicant pool for competencies/demographics. Wates &,; ' City of Denton, TX. Proposal to Provide Executive Recruitment Services. Task III: Screening of Applicants and Recommendation of Semi -Finalists In Task III the Recruitment Project Team, under the direction of Chuck Rohre and Miguel Ozuna, will screen the candidates against the criteria within the position and candidate profiles and develop a list of semi-finalists for recommendation to the Mayor and City Council. The most promising applicants will receive a candidate essay questionnaire to complete that will provide additional information about the candidates' background and experience. We will then narrow the list to a group of 10-15 semifinalists for your review and to select finalists. Another unique aspect of our recruitment process is our use of online recorded interviews for the screening process. Responses are timed and questions are not provided in advance. This tool allows our Team to develop a more comprehensive understanding of the candidate's ability to think "on their feet" as well as their personal and professional demeanor. This virtual interview can be scored by individual selection team members as well as the consulting team for later review and comparison. Our Team will provide an online link for the Mayor, City Council and others designated, who have input into the hiring decision, allowing them to review and rate the recorded responses. This provides the organization with additional candidate assessments that can be customized to fit the unique needs of your City. Throughout the process, you will have access to our Master Applicant List (MAL), which will provide pertinent data for each applicant. Project Milestone Deliverables Estimated Duration . W&C compares applications to the approved candidate profile developed in our searchable applicant database. . W&C develops customized candidate questionnaire & due diligence questionnaire to provide to applicants who most closely meet the candidate profile. . Top 10-15 candidates identified as semi-finalists. . Semi -Final Report is prepared, including the brochure, master applicant list, cover letter, Applicant screening and resume and completed questionnaire of recommendation of semi- candidates to be considered. 2 Weeks finalists. . W&C and the City review and rate video interviews. . W&C sends links to City to review the aggregate responses and ratings. . Semi-finalists complete candidate management style assessment, responses are reviewed and interview questions are developed. . Recruitment Co -Project Team Leaders meet with Mayor and City Council to review recommended semi-finalists. Mayor and City Council select finalists for on-site interviews. City of Denton, TX. Proposal to Provide Executive Recruitment Services. Task IV: Conducting Background Checks, Reference Checks and Academic Verifications When the Mayor and City Council approve of a group of finalists for on-site interviews, W&C will begin the process of conducting reference checks, background checks and academic verifications. W & C will ensure membership and good standing in the applicable state bar and that the applicant is in good standing. A Confidential Reference Report is prepared for each finalist to complete our understanding of his/her management and leadership characteristics and professional work performance. For the background checks, W&C will develop information on the candidates in the following areas: • Consumer Credit • City/County Criminal • City/County Civil Litigation • Judgment/Tax Lien • Motor Vehicle • Bankruptcy • State District Superior Court Criminal • State District Superior Court Civil Litigation • Federal District Criminal • Federal District Civil Litigation To ensure that our quality standards are maintained, we require a minimum of ten business days between the time that you select the finalists for on-site interviews and when we submit the candidate documentation for your final interview process. Project Milestone Defiverables Estimated oration • Finalists complete narrative of their two Finalists complete supplemental most significant professional 1 - 2 Days work products. achievements and a critical problem analysis. . W&C confirms interviews withcandidates. Design final process with City Council for on-site interviews 1 —2 Days with finalists. • Travel logistics are scheduled for the candidates. Background checks, reference • W&C completes background checks, checks and academic reference checks and academic 10 Days verification. verifications for finalists. Task V: Final Interview Process Upon completion of Task IV, we will work with you to develop the final interview process. We will provide documentation on each of the finalists which will provide the highlights of their professional experience and leadership/management profile (Gap Analysis) as well as a summary of the results of the reference checks, background checks and academic verifications. In addition, the Final Report will include guidelines for interviewing the candidates, suggested interview questions and a candidate assessment process for your interview panel(s). The Recruitment Co -Project Team Leaders will be available during the final interview process to answer questions about the candidates and, if requested, assist with the final evaluation of the candidates. In addition, if the City requests the service, we will assist you with the development of a compensation package and related employment considerations and assist with the negotiation of an employment agreement. Wates &,; City of Denton, TX. Proposal to Provide Executive Recruitment Services. Project Milestone eliverable Estimated Duration ` . Final Report is prepared, including brochure, interview schedule, cover letter, resume, candidate questionnaire, two Final Report prepared and examples of candidates' most significant 1 Day delivered to City. professional achievements, suggested interview questions, candidate assessment form and management style probing questions. . Interviews are scheduled. . Recruitment Co -Project Team Leaders On-site interviews with finalists. attends client interviews and is available 1 — 2 Days to participate during deliberations of candidates. . If requested, W&C participates in candidate employment agreement negotiations. Offer made /accepted. . W&C notifies candidates of decision. 1 — 2 Days . W&C confirms final process close out items with the City of Denton. Strategy for Recruitment of Diverse Candidates Our corporate core values and work environment reflect our broader social aspirations for a diverse workforce, equal opportunity and cross-cultural respect. We have established strong and credible networks with minority and female leaders nationwide. In addition, we are corporate members of the National Forum for Black Public Administrators (NFBPA) and the Hispanic Network and are on their National Corporate Advisory Council. We participate in their membership events on a regular basis. To that end, we take responsibility for diversity in our organization, our recruitment strategy and our candidate pools. In this recruitment, we will use our established networks to make direct and personal contacts with prospective minority and female candidates and encourage them to consider the City of Denton's City Attorney position. Because of our performance record in presenting a diverse applicant pool, these prospective candidates know they will be fairly considered in the process. Waters & Company, a Springsted Company, is committed to ensuring equitable participation in our business and employment opportunities without regard to race, color, religion, sex, national origin, age, disability, veteran status, marital status or sexual orientation. As a leader in the executive recruitment industry, we take positive actions to prevent and to remedy any discriminatory effects of business and employment practices. Springsted Incorporated, our parent company, is a WBE. Wates &,; ' City of Denton, TX. Proposal to Provide Executive Recruitment Services. Timeline Below is an estimated Timeline for the executive recruitment process. You will be asked during the first on-site meeting to review and approve a Timeline for the recruitment project. It is our intent to conduct the recruitment expeditiously, but not at the expense of finding high-quality candidates for you. CITY OF DENT N, T EXECUTIVE E IT E T FOR CITY ATTORNEY PRELIMINARY TIMELINE The following Timeline represents a preliminary schedule for your executive recruitment based on a commencement date of January 31, 2017. Actual target dates will be developed in consultation with and approved by the Mayor and City Council. Project Milestone Deliverables Target Date W&C completes on-site interviews to develop candidate profile and recruitment brochure; the City approves ad placement schedule and timeline. Profile development, • W&C sends draft recruitment brochure to the advertising and candidate City. January 31 — March 6 outreach. . The City returns draft recruitment brochure (with edits) to W&C. W&C commences executive recruitment advertising and marketing. . Online data collection and profile development. W&C commences formal review of applications and sends most promising applicants a Candidate Questionnaire to provide additional information about background and experience. Candidates complete recorded interview online. W&C completes formal review of applications Applicant screening and and sends selected resumes and questionnaire assessment and responses to the City for review. Also March 6-21 recommendation of semi- candidates' recorded interviews are presented. finalists. Semi-finalists complete candidate management style assessment and responses are reviewed and interview questions are developed. W&C meets with the City and recommends semi- finalists; the City selects finalists for on-site interviews. Comprehensive background check and . W&C completes reference checks/background March 29 reference checks checks/ academic verification on finalists. completed for finalists. W&C sends documentation for finalists to the On-site Interviews with City. Week of April 3 finalists. . The City conducts on-site interviews with finalists. Employment offer made / . The City extends employment offer to selected Week of April 10 accepted. candidate. City of Denton, TX. Proposal to Provide Executive Recruitment Services. M The all-inclusive professional fee to conduct the recruitment is provided below and includes the cost of professional services by the Recruitment Co -Project Team Leaders, the project support staff and all project -related expenses such as advertising, preparation of the recruitment brochure, printing, candidate background, reference and academic verification checks and travel expenses for on-site visits. Travel expenses incurred by candidates for on-site interviews with the client are not the responsibility of W&C and are handled directly by the client organization. The all-inclusive professional fee will be billed in four installments: 30% of the fee will be billed at the beginning of the recruitment; 30% at the implementation of Phase I; 30% at the implementation of Phase II; and 10% upon acceptance of an offer by the candidate. We are open to negotiate an alternative payment schedule if selected for this recruitment. All questions regarding the professional fees and project -related expenses should be directed to Chuck Rohre at crohre(i�,waters-c�y.coin, 214-608-7477 or Miguel Ozuna at mozuna(i�,waters- coinany.coin 214-842-6478. PHASE DESCRIPTION OF PROFESSIONAL SERVICES FEES Task 1 — Candidate Profile Development/Advertising/Marketing City. Additional work specifically requested by the City which is outside of the scope of (includes one day on site by Recruitment Co -Project Team this project will be invoiced at the hourly rate of $220 plus expenses. W&C will submit a Phase I Leaders) will be required prior to commencing any additional services. Task 2 — Identify Quality Candidates Task 3 — Screening of Applications and Submission of Recommended Semi -Finalists to Client (includes one Phase II day on site by the Recruitment Co -Project Team Leaders) Task 4 — Reference Checks, Background Checks and Academic Verifications Phase III Task 5 — Final Process/On-Site Interviews with Finalists (includes two days on site by Co -Project Team Leaders) Conclusion Acceptance of offer by candidate TOTAL ALL-INCLUSIVE PROFESSIONAL FEE $21,000* FOR CITY ATTORNEY RECRUITMENT * Reflects a discount from the fee of the City Attorney process ($24,500) and the City Auditor process ($21,500). Any additional discount would provide inadequate resources to conduct a quality process. OPTIONAL SERVICES FOR CONSIDERATION FEES On rare occasions, W&C is asked to provide additional search services that are not included in this scope of service or to provide more than three on-site visits to the City. Additional work specifically requested by the City which is outside of the scope of $220 per hour this project will be invoiced at the hourly rate of $220 plus expenses. W&C will submit a plus expenses written explanation of the additional services to be provided and the estimated hours that will be required prior to commencing any additional services. Wates &,; City of Denton, TX. Proposal to Provide Executive Recruitment Services. Triple Guarantee Our Triple Guarantee is defined as: (1) A commitment to remain with the recruitment assignment until you have made an appointment for the fees and tasks quoted in this proposal. If you are unable to make a selection from the initial group of finalists, W&C will work to identify a supplemental group until you find a candidate to hire. (2) Your executive recruitment is guaranteed for 24 months against termination or resignation for any reason. The replacement recruitment will be repeated with no additional professional fee, but only for project -related expenses. Candidates appointed from within your organization do not qualify for this guarantee. This guarantee is subject to further limitations and restrictions of your state laws. (3) W&C will not directly solicit any candidates selected under this contract for any other position while the candidate is employed with your organization. References City of cr h Richland Hills, Texas Mr. Patrick Hillis 817-4237-6101 phillis@nrhtx.com Project. Selection of City Attorney City of crWorth, Texas Former Mayor Moncrief 817-338-1225 mike@moncriefinvestments.com Project: Selection of City Attorney Experience City of New Braunfels, Texas Ms. Julie O'Connell, Former Human Resources Director, now Human Resources Director, City of Huntsville 936-291-5436 joconnell@huntsvilletx.gov Project: Selection of City Attorney City of eniscn, Texas Mr. Robert Hanna, former City Manager 325-676-6206 Robert.Hanna@abilenetx.com Project. Selection of City Attorney The following is a list of previous Administration Executive Recruitments: ® f f Year Client State Recruitment Population 2010 Austin TX City Attorney 885,400 2010 Fort Worth TX City Attorney 792,727 2010 Powhatan County VA County Attorney 27,964 2010 Stafford County VA County Attorney 136,788 2012 Orange County VA County Attorney 34,246 2012 Petersburg VA City Attorney 33,740 2012 Wilmington NC City Attorney 75,838 2013 Denison TX City Attorney 22,816 2015 Accomack County VA County Attorney 33,148 2015 San Antonio TX City Attorney 1,409,000 2016 North Richland Hills, TX City Attorney 69,730 Wates & "I"ompanv A City of Denton, TX. Proposal to Provide Executive Recruitment Services. Mr. Rollie Waters, Executive Vice President Direct Phone: (214) 466-2424 Email: ivvatei°s wa_tei's-cc�in�any. coin Recruitment Co -Project Team Leader Mr. Chuck Rohre, Senior Vice President Direct Phone: (214) 466-2436 Email: crohre waters-cotnpany.cotn Recruitment Co -Project Team Leader Mr. Miguel Ozuna, Vice President Direct Phone: (214) 842-6478 Email: mozuna(i ,waters-c�y.coin Mr. Chuck Anderson, Senior Vice President Direct Phone: (817) 965-3911 Email: canderson(i�,waters-coinany.coin Ms. Jada Kent, Project Manager Direct Phone: (214) 466-2429 Email: ikent(i waters-c�y.coin Ms. Jenelle Stapleton, Project Coordinator Direct Phone: (214) 466-2445 Email: rsta leton(a�waters-corm any.com City of Denton, TX. Proposal to Provide Executive Recruitment Services. 7 d Rollie Waters Executive Vice President Rollie O. Waters is an Executive Vice President, of Waters & Company, A Springsted Company. Since 1976, Rollie has been a management consultant to private and public sector clients. He has consulted with national and international clients in the area of HR Management system design and strategic management. He has given various lectures and seminars for organizations in the areas of compensation as it relates to performance management. He is viewed on a national level as one of the foremost authorities in succession planning and performance management system design for the public sector. He has spoken before such organizations as the International City/County Managers Association, American Management Association, The Alliance for innovation, Southern Methodist University, the University of Maryland, National Forum of Black Public Administrators, California Institute of Technology, the Texas Municipal League (TML), the International Personnel Management Association (IPMA-HR), several international companies in Great Britain, and various other U.S. public and private sector agencies and organizations. Rollie has been actively involved in the development of competency -based knowledge selection and development tools over the past twenty years. He has been instrumental in ensuring the proprietary profiles that he has designed attract the right candidates that fit the organization's needs. In addition, Rollie's extensive knowledge of performance management solidifies matching the management style most compatible with the organization's success. His research on succession planning has led him and his team to be able to help shape the future of organizations through their executive recruitment activities. Rollie has been widely published in national journals and magazines focusing on human resource challenges. His publications include a research article in the Public Personnel Management Journal titled "The Impact of Behavioral Traits on Performance Appraisal." Prior to founding W&C, Rollie held an executive position with Dun & Bradstreet Co., Inc., and a management position with Owens Corning Fiberglass. Areas of Expertise • Executive Recruitment • Web -Based Compensation Support • Management Development • Competency -based Systems and Development Systems Professional Accomplishments and Education • Organizational Strategy • Mentoring Programs • Performance Management • Succession Planning Rollie is a member of Mensa, a Strategic Partner with the International City/County Managers Association, International Management Consultants and Alliance for Innovation, a member of the National Corporation Advisory Council of the National Forum for Black Public Administrators, and numerous other professional groups. He has also appeared in several professional directories such as Who's Who in the World, Who's Who in Finance and History, and many others. Rollie has an extensive background in the behavioral sciences and strategic planning. He received his MBA at Pepperdine University and his Bachelor of Science degree in Psychology from the University of South Carolina. In addition, he is a Certified Management Consultant (CMC); CMC is a certification mark awarded by the Institute of Management Consultants USA and represents evidence of the highest standards in consulting and adherence to the ethical canons of the profession. J3C °'> ,; City of Denton, TX. Proposal to Provide Executive Recruitment Services. 7 7 Chuck Rohre Senior Vice President Chuck Rohre a Senior Vice President with Waters & Company, a Springsted Company. In this role, he is responsible for managing and conducting executive recruitment engagements for the firm to insure their integrity, timeliness and adherence to budget parameters. Chuck has more than 35 years of experience in managing and consulting in both the private and public sectors. He has served as Police Chief and Director of Public Safety for North Texas municipalities with populations ranging from 9,000 to 200,000 plus. Prior to beginning his consulting career, Mr. Rohre served for three years as Police Chief of Plano, Texas. Chuck joined the firm in January 2006 following a 13 -year engagement with another nationally recognized public sector search firm where he managed the Texas and Southwestern operations. He has an extensive and successful track record of completed recruitment across the nation, especially in the Midwestern and Southwestern states. Among others, he has led recruitment processes for City and Assistant City Managers, Police Chiefs, Fire Chiefs, Library Directors, Chief Information Officers, City/County Attorneys, Parks & Recreation Directors, Finance Directors and Public Works Directors. The clients range from as small as 2,500 to as large as 700,000 in population. He has also conducted management consulting assignments in a number of areas including public safety, career development and strategic planning. He has written and presented training in a variety of subject areas including personnel assessment, leadership and management skills, and career development for public sector employees. Areas of Expertise • Executive Recruitment Background Investigations Assessment Centers Professional Accomplishments and Education • Career Development • Strategic Planning • Organizational Assessment Chuck received his bachelor's degree in Career Development from the Dallas campus of Abilene Christian University and his Master's degree in Human Relations and Management from the same institution. He has completed advanced management training at the Institute for Law Enforcement Administration and now serves on its adjunct faculty and advisory board. Chuck completed the Federal Bureau of Investigation's prestigious LEEDS course at Quantico, Virginia. He is a veteran of the United States Army, serving in the United States and the Republic of Viet Nam. C I Wates & "I"ompan City of Denton, TX. Proposal to Provide Executive Recruitment Services. 9 Miguel Ozuna Vice President and Consultant Miguel Ozuna is a Vice President with Waters & Company, A Springsted Company. Prior to joining Waters & Company, Mr. Ozuna served as Director of Human Resources for the City of Cedar Park (Central Texas) and the City of Weslaco (Rio Grande Valley). His extensive experience of over 15 years in municipal human resources has given Mr. Ozuna broad familiarity and knowledge of municipal government operations making him ideal to provide executive recruitment and organizational management services. His expertise encompass all aspects of the municipal human resources function to include recruiting, benefits administration, compensation, employee relations, training and organizational management. Miguel's work in municipal human resources has propelled him to leadership positions in statewide municipal organizations to include the Texas Municipal Human Resources Association and the Texas Public Employers Labor Relations Association. Areas of Expertise • Recruitment • Labor Relations (Civil Service, Collective Bargaining & Meet and Confer) Education and Professional Affiliations Education Sam Houston State University, Huntsville, Texas; Bachelor of Arts in History • Organizational Management Employee Relations Affiliations Texas Municipal Human Resources Association Texas Public Employer Labor Relations Association National Public Employer Labor Relations Association International Public Management Association for Human Resources City of Denton, TX. Proposal to Provide Executive Recruitment Services. 7 Charles (Chuck) Anderson Senior Vice President Charles (Chuck) S. Anderson is a Senior Vice President with Waters & Company, a Springsted Company. Prior to joining the Waters & Co., Chuck worked for local governments and non-profit organizations, including City Manager for Dallas, Texas; Executive Director for the Dallas Area Rapid Transit (DART); and Executive Director for the Michigan Education Association. Chuck also served as Director for Local Government Reform for the International City/County Association (ICMA), managing a U.S. government contract for the planning and delivery of technical assistance to local governments in Central and Eastern Europe. His last assignment in this role with ICMA was to recruit and supervise a team of technical consultants to assist in re -building local governments in Bosnia following agreement on the Dayton Accords. During his service with the Michigan Education Association, Chuck also served as Senior Consultant for Urban Planning and Management for Michigan State University's Institute for Public Policy and Social Research. Areas of Expertise • Executive Recruitment • Organizational Design • Leadership/Management Development • Organizational Development Professional Accomplishments and Education Chuck received a Bachelor of Arts degree in political science and human resources management and a Masters of Public Administration degree from the University of Kansas. He received the prestigious L.P. Cookingham Award for Development of Young Professionals from the International City/County Management Association (ICMA) and the Minority and Women Advancement Award from the American Public Transit Association (APIA). He was also recognized as Public Administrator of the Year by the American Society of Public Administration (ASPA) and Outstanding Management Innovator (Honorable Mention) by ICMA. Chuck was recognized in 2007 with the Lifetime Achievement Award from his Public Administration Alumni Association at the University of Kansas. C I Wates & ,;ompan City of Denton, TX. Proposal to Provide Executive Recruitment Services. 74 Jada Kent Project Manager Jada Kent is a Project Manager with Waters & Company, a Springsted Company. Jada is responsible for managing the recruitment process by organizing and coordinating administrative support for each project. She is also responsible for backing up the lead consultant throughout the entire scope of a recruitment, to include communication with the client and vetting of candidates. Areas of Expertise Human Resources Management (HRM) Public Policy Analysis Professional Accomplishments and Education Public Administrative Best Practice • Comparative Studies Jada received a bachelor's degree in United States History, with a minor in Political Science from the University of North Texas. While at UNT, she was the recipient of multiple oral litigation awards and even competed nationally in the Texas Undergraduate Moot Court Association. Jada has also completed a Master's in Public Administration from the University of Texas — at Dallas. As a Public Affairs Specialist in both the Army (active duty) and the Air National Guard, respectively, Ms. Kent presented the Air Force story to a global audience as a journalist for the 136"' Airlift Wing's Public Affairs Staff. Jada is in the process of acquiring her certification with Society for Human Resource Management (SHRM-CP). J3C °'> ,; City of Denton, TX. Proposal to Provide Executive Recruitment Services. 9 Jenelle Stapleton Project Coordinator Jenelle Stapleton is the Project Coordinator at Waters & Company, a Springsted Company. She is responsible for supporting the lead consultants throughout the entire scope of the recruiting process, as well as providing administrative support to the Executive Vice President, Rollie Waters. In this role, Jenelle coordinates communications with candidates, the processes resumes and distributes candidate questionnaires. She is also responsible for providing support to candidates regarding technical and logistic issues. She assists the consultants in scheduling the semifinalist interviews, submitting profiles for background checks and education verification, as well as notifying the finalists of project status. Her responsibilities extend to editing presentations, advertisement placements and general office administration. Professional Accomplishments and Education Jenelle is a very task oriented professional with over 13 years of experience in Office Administration — at least 6 of those years have been spent in executive level support and two have been spent in Human Resources Administration. She also has over eight years of experience in sales and marketing including over seven years overseeing employees. The majority of this experience began in branch banking as a Financial Sales Supervisor where, in addition to managing day to day branch operations, she also took on the role in coordinating the branch's business development. She went on to Merchant Services as the Client Relations Executive where she also filled the role of the Commissions Analyst with the Human Resource Department. This dual -position entailed managing client escalations, analyzing and adjusting pricing structures, contract negotiation, monitoring non -compete agreements and the paying and reversal of commissions. Prior to joining Waters & Company, Ms. Stapleton was involved in Real Estate Investment as the Operations Manager. In this position, she managed the renovation and budgets of over 200 single family homes and provided administrative support once the properties were tenant occupied. Jenelle has her Associates of Applied Sciences in Financial Operations and an Associates in Business Administration. She is currently pursuing her bachelor's degree in HR Management at Texas Women's University. Her major outside interest involves volunteering with Dogs on Deployment ("Dol)"), a non- profit dedicated to helping military members keep their pets while overseas. DoD arranges pet fosters and thus alleviates the need for pet relinquishment from military members due to the hardships of deployment. C I Wates & "I"ompan City of Denton, TX. Proposal to Provide Executive Recruitment Services. 76 APPENDIX I Sample Brochure THE COMMUNITY The City of North Richland Hills is a vibrant community centrally located within the Dallas -Fort Worth Metroplex just 12 miles from downtown Fort Worth and 31 miles from downtown Dallas. It's the third largest city in Tarrant County following Fort Worth and Arlington and has a population of more than 67,000 residents. The North Central Texas Council of Governments predicts the City's population will grow to about 75,000 by the year 2030. With well-planned neighborhoods, affordable housing, a low crime rate, excellent schools, convenient shopping, an abundance of recreational opportunities, and easy access to the rest of the Dallas -Fort Worth region, the community is one of the best places around to call home. The City's 18.3 square miles of land area is interlaced with major transportation assets such as Interstate Loop 820, State Highways 183,121 and 26 and Farm to Market Road 1938. Three airports, DFW International, Meacham Field, and Alliance, are located within 15 miles and two commuter rail stations are being planned in North Richland Hills as part of the new TEX rail service. ,.r A ND H , THE COMMUNITY (Continued) More than 1,200 businesses call North Richland Hills home, including several large service and manufacturing centers with 100 employees or more. The majority of public school students in the community attend campuses in the Birdville Independent School District. A few attend Keller ISD campuses. The Birdville District operates two high schools, 3 middle schools, and 9 elementary campuses within North Richland Hills, several of which have earned the state's "recognized" and "exemplary" ratings. Higher educational opportunities include the Northeast Campus of the Tarrant County College District, and numerous four-year institutions in the Metroplex, with many public and private collegiate choices. The City of North Richland Hills operates an outstanding municipal parks and recreation system with more than 750 acres of park land including, natural areas, exercise trails, playgrounds, basketball courts, tennis courts, softball fields, sand volleyball courts, soccer fields, football fields, baseball diamonds, and more. Residents also enjoy family - friendly amenities at the city -owned NRH2O Family Water Park, the NRH Centre (which includes a recreation center, banquet hall and senior center), the Richland Tennis Center, and the award-winning North Richland Hills Public Library. The City also owns and operates Iron Horse Golf Course, which is consistently rated one of the best and toughest municipal courses in the state. North Richland Hills provides an exceptional environment in which to live, work and raise a family. City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com DEN, ` ON File #: ID 17-081, Version: 1 Legislation Text Agenda Information Sheet SUBJECT Deliberations regarding Personnel Matters - Under Texas Government Code Section 551.074; and Consultation with Attorneys - Under Texas Government Code Section 551.071. Consultation, discussion, and deliberation about the appointment, employment, and duties of the City Attorney including, but not limited to, the retirement of the current City Attorney, the appointment of an interim City Attorney, and the process by which a new City Attorney will be selected; consultation with the City's attorneys regarding associated legal issues where discussion of these legal matters in an open meeting would conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, or would jeopardize the City's legal position in any administrative proceeding or potential litigation. City of Denton Page 1 of 1 Printed on 1/20/2017 povveied by I_egivt9i IN City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com DEN, ` ON Legislation Text File #: ID 17-077, Version: 1 Agenda Information Sheet SUBJECT Deliberations regarding Real Property - Under Texas Government Code Section 551.072; Consultation with Attorneys - Under Texas Government Code Section 551.071. Receive information from staff and discuss, deliberate, and provide staff with direction regarding the potential acquisition of real property interests generally located northwest of N. Loop 288 and west of N. Locust St. in the City of Denton, Denton County, Texas; discussions had, deliberation, and direction given, by the Denton City Council in an open meeting would have a detrimental effect on the position of the governmental body in negotiations with a third party. Consultation with the City's attorneys regarding legal issues associated with the acquisition of the real property interests described above; discussion of these legal matters in an open meeting would conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, or would jeopardize the City's legal position in any administrative proceeding or potential litigation. [Long Road Substation] City of Denton Page 1 of 1 Printed on 1/20/2017 povveied by I_egivt9i IN City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com DEN, ` ON Legislation Text File #: ID 17-099, Version: 1 Agenda Information Sheet SUBJECT Consultation with Attorneys - Under Texas Government Code Section 551.071; Deliberations Regarding Real Property - Under Texas Government Code Section 551.072. Consultation with the City's attorneys regarding legal issues associated with the potential relocation of a Texas Municipal Power Agency transmission line ("Brinker TMPA transmission line") currently located on the east of E. Loop 288 and south of Brinker Road in the City of Denton, Denton County, Texas and the abandonment of certain transmission line easements related to the same and owned by the City; discussion of these legal matters in an open meeting would conflict with the duty of the City's attorneys to the City of Denton and the Denton City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, or would jeopardize the City's legal position in any administrative proceeding or potential litigation. Receive information from staff and discuss, deliberate, and provide staff with direction regarding the potential relocation of the Brinker TMPA transmission line and the abandonment of certain City -owned transmission line easements related to the same; discussion had, deliberation, and direction given, by the Denton City Council in an open meeting would have a detrimental effect on the position of the governmental body in negotiations with a third party. [Relocation of TMPA Transmission Line - Brinker Road and E. Loop 288] City of Denton Page 1 of 1 Printed on 1/20/2017 povveied by I_egivt9i IN City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com DEN, ` ON File #: ID 17-133, Version: 1 Legislation Text Agenda Information Sheet SUBJECT Deliberations regarding Personnel Matters - Under Texas Government Code Section 551.074; and Consultation with Attorneys - Under Texas Government Code Section 551.071. Discuss and deliberate regarding the evaluation of candidates and the appointment/employment of a City Auditor and consultation, deliberation and receipt of information from the City attorneys involving legal matters relating to employment law and interviewing candidates, where a public discussion of these legal matters would clearly conflict with the duty of the City's attorneys to the City of Denton under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. City of Denton Page 1 of 1 Printed on 1/20/2017 povveied by I_egivt9i IN City Hall City of Denton 215 E. McKinney St. - Denton, Texas 76201 www.cityofdenton.com , DENTON File #: ID 17-134, Version: 1 Legislation Text Agenda Information Sheet DEPARTMENT: Legal Department CM/ ACM: Anita Burgess, City Attorney Date: January 24, 2017 SUBJECT Consider adoption of an ordinance approving an employment agreement for the City Auditor and authorizing the Mayor to execute said Agreement setting the compensation and terms of that employment; authorizing expenditures and actions; and providing an effective date. BACKGROUND The City Council has conducted a search for a City Auditor, interviewed candidates, and desires to employ the selected candidate. City of Denton Page 1 of 1 Printed on 1/20/2017 povveied by I_egivt9i IN SALegal\Our Documents\Ordinances\17\City Auditor Ord. doc ORDINANCE NO. AN ORDINANCE APPROVING AN EMPLOYMENT AGREEMENT FOR THE CITY AUDITOR AND AUTHORIZING THE MAYOR TO EXECUTE SAID AGREEMENT SETTING TIIE COMPENSATION AND TERMS OF THAT EMPLOYMENT; AUTHORIZING EXPENDITURES AND ACTIONS; AND PROVIDING AN EFFECTIVE, DATE. WHEREAS, the City Council desires to employ a City Auditor for the City of Denton; and WHEREAS, the City Council finds that this Ordinance is in the public interest; NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS: SECTION 1. The recitals and findings contained in the preamble of this Ordinance are incorporated into the body of this Ordinance. SECTION 2. The City Council hereby approves an Employment Agreement for the City Manager and authorizes the Mayor to execute the Agreement on behalf of the City. SECTION 3. The City expenditures provided for in the Agreement are hereby authorized. SECTION 4. This Ordinance shall become effective immediately upon its passage and approval. PASSED AND APPROVED this the day of 12017. CHRIS WATTS, MAYOR ATTEST: JENNIFER WALTERS, CITY SECRETARY N APPROVED AS TO LEGAL FORM: ANITA BURGESS, CITY ATTORNEY BY