2021-025 TMPA Transmission Debt NoticeDate: April 30, 2021 Report No. 2021-025
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
Notice of Intent of Texas Municipal Power Agency (“TMPA”) to issue Transmission Debt
Refunding Bonds.
EXECUTIVE SUMMARY:
TMPA, in accordance with its finance plan, and the principal terms on which the Transmission
Debt that is planned to be issued, will be issuing refunding bonds in an aggregate amount not to
exceed $230 million (the “2021 Refunding Bonds”). The substantial proceeds of the 2021
Refunding Bonds will be used to refund the following major debts:
Subordinate Lien Revenue/Transmission Revenue Converting Security Refunding Bonds,
Series 2010, currently outstanding in the amount of $100,130,000 (the "Series 2010
Bonds");
System Net Revenue/Transmission Revenue Converting Security Refunding Bonds, Series
2017, currently outstanding in the amount of $82,435,000; and
A portion of the Agency’s System Net Revenue/Transmission Revenue Converting
Security Direct Purchase Revolving Notes, Series A, currently outstanding in the principal
amount of $31,100,000 (the "Series A Notes").
The 2021 Refunding Bonds will mature not later than September 1, 2051 and will bear interest at
rates resulting in a true interest cost for the series not to exceed 4%. In accordance with the Joint
Operating Agreement (the “JOA”), the 2021 Refunding Bonds will not be issued unless the
resolution authorizing the 2021 Refunding Bonds is approved by a Super Majority Vote (as defined
in the JOA) of the Board of Directors.
DME and Finance Department staff participated in TMPA Committee discussions and agree with
this refunding. Additionally, the refunding bonds will include a shorter than customary call date
(3 years) in order to allow for flexibility in the event the related transmission assets are unbundled
and allocated to each of the member cities.
BACKGROUND:
Per the requirements of the JOA between TMPA and the member cities of Denton, Denton,
Garland, and Greenville, TMPA is required to notify the cities that it intends to incur Transmission
Debt not sooner than 60 days from the date of its notice letter (April 28, 2021). No formal action
of the City Council is required but staff welcomes any questions you may have regarding this
refunding.
Date: April 30, 2021 Report No. 2021-025
ATTACHMENT(S):
Exhibit 1 – April 28, 2021 TMPA Notice letter
STAFF CONTACT:
Antonio Puente
General Manager, Denton Municipal Electric
(940) 349-8487
Antonio.Puente@cityofdenton.com
REQUESTOR: Staff initiated
PARTICIPTAING DEPARTMENTS: n/a
STAFF TIME TO COMPLETE REPORT: 1 hour
TEXAS MUNICIPAL POWER AGENCY P.O. BOX 7000 BRYAN, TEXAS 77805-7000 (936) 873-2013
SERVING THE CITIES OF BRYAN, DENTON, GARLAND & GREENVILLE
April 28, 2021 City of Bryan, Texas City of Garland, Texas 300 S. Texas Avenue 200 N 5th Street
Bryan, Texas 77803-3937 Garland, Texas 75040 Attention: City Manager Attention: City Manager City of Denton, Texas City of Greenville, Texas 215 E. McKinney St. 2821 Washington St.
Denton, Texas 76201-4229 Greenville, Texas 75401 Attention: City Manager Attention: City Manager Re: Notice of intent of Texas Municipal Power Agency to issue Transmission Debt
Ladies and Gentlemen: This letter constitutes notice to the each of the addressed Cities pursuant to Section 2.6.2.5. of the Joint Operating Agreement (the “JOA”) by and between and among Texas Municipal
Power Agency (the “Agency”) and the cities of Bryan, Denton, Garland, and Greenville, that the Agency intends to incur Transmission Debt not sooner than 60 days from the date of this letter. In accordance with our previous briefings to the Planning and Operations Committee, the
finance plan, and the principal terms on which the Transmission Debt that is planned to be issued, are substantially as follows: The Agency will issue refunding bonds in an aggregate amount not to exceed $230 million (the “2021 Refunding Bonds”). The proceeds of the 2021 Refunding Bonds will be used
to refund all of the Agency’s outstanding Subordinate Lien Revenue/Transmission Revenue Converting Security Refunding Bonds, Series 2010, currently outstanding in the amount of $100,130,000 (the "Series 2010 Bonds"), System Net Revenue/Transmission Revenue Converting Security Refunding Bonds, Series 2017, currently outstanding in the amount of $82,435,000, a portion of the Agency’s System Net Revenue/Transmission
Revenue Converting Security Direct Purchase Revolving Notes, Series A, currently outstanding in the principal amount of $31,100,000 (the "Series A Notes") and to pay the costs of issuance of the 2021 Refunding Bonds.
TEXAS MUNICIPAL POWER AGENCY P.O. BOX 7000 BRYAN, TEXAS 77805-7000 (936) 873-2013
The 2021 Refunding Bonds will mature not later than September 1, 2051 and will bear
interest at rates resulting in a true interest cost for the series not to exceed 4%. In
accordance with the JOA, the 2021 Refunding Bonds will not be issued unless the resolution authorizing the 2021 Refunding Bonds is approved by a Super Majority Vote (as defined in the JOA) of the Board of Directors. The 2021 Refunding Bonds will be issued as First Lien Transmission Debt, and therefore will be secured in a manner provided
for in the definition of Transmission Debt in the JOA; consequently, the issuance of the
2021 Refunding Bonds will be secured solely from the Net Revenues of the Agency’s Transmission System that was authorized to be created in 2010 and became effective on September 1, 2018. The Series 2010 Bonds, the Series 2017 Bonds and the Series A Notes are all currently secured by the same first lien on the Agency’s Transmission System Net
Revenues. The issuance of the 2021 Refunding Bonds may require the incurrence of
related costs and obligations associated with surety bonds, insurance policies, banking agreements, letters of credit, or other financial commitments relating to the issuance, security and sale of the 2021 Refunding Bonds. The refunding of a portion of the Series A Notes will restore a like amount of capacity to that program, which, pursuant to the
resolution creating that program, has a current issuance capacity of $60 million. That
revolving note program was established in 2017 with Bank of America, N.A. to provide a short-term financing source for Transmission System facilities and operations. Please let me know if you have any questions. Thank you for your attention to this matter.
Sincerely, Texas Municipal Power Agency
Bob Kahn, General Manager
TEXAS MUNICIPAL POWER AGENCY P.O. BOX 7000 BRYAN, TEXAS 77805-7000 (936) 873-2013
cc.
General Manager
Bryan, Texas Utilities 205 E. 28th Street Bryan, Texas 77803
General Manager
Denton Municipal Electric 1659 Spencer Road Denton, Texas 76205
General Manager and CEO
Garland Power & Light 217 N. 5th Street Garland, Texas 75040
Deputy General Manager and COO
Garland Power & Light 217 N. 5th Street Garland, Texas 75040
General Manager
GEUS 6000 Joe Ramsey Blvd. Greenville, Texas 75402