PILLAR: Fiscally Sound
AGENDA DATE: August 25, 2026
COUNCIL DISTRICT(S): N/A
DEPARTMENT: City Controller’s Office
PRIORITY: N/A
______________________________________________________________________
SUBJECT
Title
An ordinance approving and authorizing the issuance by the City of Dallas of its Drainage Utility System Commercial Paper Notes, Series A, in an aggregate principal amount at any one time outstanding not to exceed $125,000,000, to provide interim financing to pay Project Costs for Eligible Projects and to refund obligations issued in connection with Eligible Projects; authorizing the issuance and delivery of promissory notes in connection with the issuance, sale and delivery of Commercial Paper Notes, and prescribing the terms, features and characteristics of such instruments; approving and authorizing certain authorized officers and employees to act on behalf of the City in the selling and delivery of such Commercial Paper Notes, within the limitations and procedures specified herein in such ordinance; making certain covenants and agreements in connection therewith; resolving other matters incident and related to the issuance, sale, security and delivery of such Commercial Paper Notes, including the approval and authorization of (1) the approval and authorizing the execution of a Revolving Credit Agreement with XXXXX a Letter of Credit, a Reimbursement Agreement, and a Fee Agreement with U.S. Bank National Association; (2) a Dealer Agreement with BofA Securities, Inc.; and (3) an Issuing and Paying Agent Agreement with U.S. Bank Trust Company, National Association in the manner herein provided; and approving the use of an Offering Memorandum in connection with the sale from time to time of such Commercial Paper Notes; and (4) providing an effective date - Total not to exceed $1,920,000 - Financing: Stormwater Operations Drainage Management Fund ($488,250 upfront closing costs plus annual fees of $1,431,750) (subject to annual appropriations)
*In alignment with Water and Wastewater Capital Improvement Program.
Body
BACKGROUND
Commercial paper provides interim financing for capital projects. The use of commercial paper permits more cost-efficient uses of capital as short-term debt is issued to closely match the amount and timing of the award of capital project contracts. Commercial paper notes are normally sold at rates of interest that are lower than rates available at the same time on long-term debt. Commercial paper issuance is supported by lines or letters of credit from highly rated banks, which assure investors that the notes will be paid in the unlikely event that a note cannot be sold to another investor at maturity. Outstanding commercial paper is periodically reduced by refinancing it with long-term debt.
The City currently has three existing commercial paper programs; a general obligation program supported by voter-approved debt, a waterworks and sewer system program supported by Water Utilities system revenue, and a program via the Love Field Airport Modernization Corporation supported by Airport system revenues; and is seeking to establish a Drainage Utility (“Stormwater”) System commercial paper program to provide interim financing of various permanent public improvements to the Stormwater System.
To support the Stormwater capital improvement program, the City’s Co-Financial Advisors, Hilltop Securities and Estrada Hinojosa & Company, recommend the establishment of Drainage Utility System Commercial Paper Notes, Series A (the “Notes”), to be issued as tax-exempt Notes, from time to time, in an aggregate principal amount not to exceed $125,000,000; and further recommend the selection of one service provider for commercial paper Liquidity/Credit Provider and one service provider for commercial paper Dealer based on the size of the program.
On April 30, 2026, the Office of Procurement Services issued a Request for Competitive Sealed Proposals seeking responses from qualified financial institutions to provide one or more services related to the establishment of separate short-term borrowing programs for the General Obligation capital improvement program and Love Field Expansion Airport Program, to replace the existing programs expiring in the fall of 2026; and the Stormwater capital improvement program.
Proposals specific to the Stormwater Notes have been received and evaluated by the procurement evaluation committee, City staff, and the City’s Co-Financial Advisors. As a result, U.S. Bank National Association was deemed most favorable as Liquidity/Credit Provider, and BofA Securities, Inc. was deemed the most favorable bid for Dealer services. In an informal bid, U.S. Bank Trust Company, National Association was selected as commercial paper Issuing and Paying Agent.
This item authorizes the establishment of the Stormwater System Commercial Paper Program. Pending approval of the ordinance, the effective date of the Stormwater System Commercial Paper Program is September 29, 2026.
ESTIMATED SCHEDULE OF PROJECT
Briefing Memo to Committee on Finance June 2026
City Council Ordinance Approval August 2026
Effective Date of Notes Agreements September 2026
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
The Committee on Finance was briefed on the “Existing Debt and FY26 Planned Debt” on October 21, 2025.
The Committee on Finance was briefed by memorandum regarding this matter on August 24, 2026. <https://dallascityhall.com/government/citymanager/Documents/Council%20Materials/August%2025,%202026,%20City%20Council%20Agenda%20Item%20%2326-1890A.pdf>
FISCAL INFORMATION
|
Fund |
FY 2026 |
FY 2027 |
Future Years |
|
Stormwater Drainage Management Fund |
$488,250.00 |
$477,250.00 |
$954,500.00 |
See Schedule I for estimated cost of issuance and commitment fees.
The program costs consist of cost of issuance fees associated with the Notes at closing, a commitment fee for the life of the Notes assessed against the program amount at a rate of 27.0 basis points paid quarterly in arrears, annual fees related to regulatory rating compliance and other processing fees, and interest accrued on outstanding Notes drawn.