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2015-07-28 Audit/Finance Committee MinutesAfter determining that a quarum is present, the Audit/Finance Comrnittee of the City of Denton, Texas, met in a regular meeting on July 28, 2015, at 10:09 a.m., in the Finance Conference Room, at City Hall, 215 E. McKinney Street, Denton, Texas at which the following items were corisidered: PRESENT: Council Member, Greg Johnson; Mayor, Chris Watts; Council Member, Joey Hawkins STAFF PRESENT: George Campbell, City Manager; Bryan Langley, Assistant City Manager; Howard Martin, Assistant City Manager; Chuck Springer, Director of Finance; Antonio Puente, Assistant Director af Finance; Phil Williams, Denton Municipal Electric, General Manager; David Wilson, Business Analysis & Energy Risk Manager; Mary Dickenson, Business Manager; and Sarah Lollar, Recording Secretary. OTHERS PRESENT: David Medanich with First Southwest Company The following items were considered: � 1. Hold a discussion and appoint a Chairperson for the Audit/Finance Committee. Chuck Springer, Directar of Finance acted as Chair until the chair was elected. Council Member Joey Hawkins made a rnotion to nominate Council Member Greg Johnson. Mayor Chris Watts seconded the motion. Motion carried unanimously. 2. Consfder approval of Audit/Ffnance Committee inutes of arch 30, 2015. Council Member Joey Hawkins made a motion to approve the minutes. Mayor Chris Watts seconded the motion. Motion carried unanimously. � t ��• � r "I � � � � � i i� Springer presented the two funds recommended for increases in the proposed budget amendment. The first proposed increase is for the Materials Management Fund and the second increase is for the Electric Fund, The amendment for the Materials Management Fund is a$2.7 million increase needed for substantial growth related to capital activity across the City resulting in an approximate 30% increase in warehouse sales this iiscal year. 1 The second propased amendment is a$10 million increase for the Electric Fund. Discussians on lowering the ECA (Energy Cost Adjustrnent) rate was brought before PUB (Public Utility Baard) in June recommending to take some of the aver callection and applying the funds toward refunding of debt. This action will produce debt service savings. The PUB also recommended lowering the ECA rate starting in October. Discussion continued about how this amendment would give the Electric Utility budgetary authority to contribute from the operating fund to the refunding. Council Member Hawkins made a motion to approve. Committee Chair Greg Johnson seconded the motion. Motion carried unanimously. '' i � � � i �� i � •�. � � � , • �' • • . 1 �' � r ' • � � G �- �. - - - Springer presented the first portion of the GO (General Obligation) Bond Refunding is to refinance a portion of the $13,431,467 in TMPA (Texas Municipal Power, Agency) Capital Appreciation Bonds due in 2016. Staff proposes to apply $10 million in cash and refinance the remaining $3.4 million through refunding bonds issued with a final maturity in 2024. Springer explained that the second portion of the GO Bond Refunding is to refund 2005 and 2006 outstanding Revenue Bonds series for savings. The principal amount of the bonds is $37.3 million with a current interest rate of 4.84%. Staff expects that refunding these bonds will lower the interest rate to 2.20 % saving appraximately $7.5 million split between the Water, Wastewater, and Electric Funds over the life of the remaining debt. Mayor Watts requested future training to be scheduled to discuss all the different type of bonds and how the bonds are issued. Discussion was had about maintaining a healthy debt coverage ratio in order to take advantage of competitive interest rates through 2018. Mayor Watts made a motion to apprave. Cauncil Member Hawkins secanded the mation. Matian carried unanimously. Mayor Watts discussed plans for the future once TMPA debt is paid. �' � I' � � � � � r � � ' � r � � � � � � �I � � i � r � .�• �� � � � I• � �• � I� � � + . i �• � .� � � � . , .� � � � � �• . :• � �. , . � � � � � � � � � . . �, � •�. � � � � •� • ��, � - �� � � ,� �' � � � � �7 reminder about an upcoming event organrzed or sponsored by the governing body; information regarding a social, cere onial, or co unity event organized or sponsored by an entity other than the governing body that was attended or is scheduled to be attended by a me ber of the governing body or an official ar e ployee of the unicipality; or an announcernent involvrng an i inent threat to the public health and safety of people in the �����ni�i��ali�� �� � �°�ri��r� after the posting af the agenda. iii��' �� t •' .�•i -r • - ,� • -• . 1 . � �� � t r'�i e , � � � � , w _ . � „ ' , ,; � "a� � � � �, �;,- �. � , � ��,.. ��' d � �: � � �1��"; .I{�1-aI� 't�i� -�-, _�W SARAH LOLLAR _.._.. ���MMI �"i`L �', CHAIR mv�"`"� RECORDING SECRETARY t`1=! ��-f�l�i� aitit'T"�"37�]"r' �� �5��� CITY OF DENTON, TEXAS