STRATEGIC PRIORITY: Fiscally Sound
AGENDA DATE: April 9, 2025
COUNCIL DISTRICT(S): Citywide
DEPARTMENT: City Controller’s Office
EXECUTIVE: Jack Ireland
______________________________________________________________________
SUBJECT
Title
An ordinance approving and authorizing the issuance by the City of Dallas of its Waterworks and Sewer System Commercial Paper Notes, Series G, in an aggregate principal amount at any one time outstanding not to exceed $300,000,000, 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; 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 (1) the approval and authorizing the execution of a Revolving Credit Agreement with Bank of America, N.A.; (2) an Amended and Restated Dealer Agreement with BofA Securities, Inc.; and (3) an Amended and Restated 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 providing an effective date - Total not to exceed $3,593,000 - Financing: Dallas Water Utilities Fund ($627,500 upfront closing costs plus annual fee of $988,500 for a total 3-year cost of $3,593,000) (subject to annual appropriations)
Body
BACKGROUND
Commercial paper provides interim financing for Dallas Water Utilities (DWU) capital projects. The use of commercial paper permits more cost-efficient use 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 of credit from highly rated banks. These lines of credit 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.
In 1987, City Council authorized an ordinance establishing a commercial paper program as interim financing for Dallas Water Utilities capital improvements for a period of 10 years, ending in September 1997, with a maximum issuance amount of $100 million. Since 1987, DWU’s initial commercial paper program has been reauthorized several times and increased in total size to $600 million. The existing $600 million program was authorized in June 2021 to be issued as Series F and Series G notes. Currently, the City is seeking to replace the expired Series G program, previously serviced by State Street Bank and Trust Co., and authorize a new Series G commercial paper program.
The proposed service providers for the Series G program are U.S. Bank Trust Company, N.A. as Issuing and Paying Agent, BofA Securities, Inc. as commercial paper dealer, and Bank of America, N.A. as Liquidity Facility provider.
In October 2024, the Office of Procurement Services issued a Request for Competitive Sealed Proposals (RFCSP) for Commercial Paper Dealer and Liquidity Provider for the City of Dallas Waterworks and Sewer System Commercial Paper Notes, Series G ($300 million). Based on the size of the program and on recommendation of financial advisors, the City selected one service provider for Commercial Paper Dealer and one service provider for Liquidity Provider.
A five-member evaluation committee was selected from the following departments:
• City Controller’s Office (1)
• Dallas Water Utilities (1)
• Department of Aviation (1)
• Financial Advisors (2)
One successful proposer was selected as Dealer by the committee on the basis of demonstrated competence and qualifications under the following criteria:
• Qualifications/experience of the firm (55%)
• Pricing (40%)
• Local Preference Program (5%)
One successful proposer was selected as Liquidity Provider by the committee on the basis of demonstrated competence and qualifications under the following criteria:
• Qualifications/experience of the firm (45%)
• Bank Ratings (20%)
• Pricing (30%)
• Local Preference Program (5%)
In an informal bid, U.S. Bank, N.A was selected as Commercial Paper Issuing and Paying Agent.
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On June 25, 2014, the City Council authorized the issuance of the City of Dallas, Texas Waterworks and Sewer System Series E short term obligations authorizing such short term obligations to be issued, sold and delivered in various forms, including commercial paper notes and a bank note; making certain covenants and agreements in connection therewith; re-establishing the 10-year tenor of the program by extending the maturity date to September 30, 2024; resolving other matters related to the issuance, sale, security and delivery of such short term obligations, including the re-appointment of U.S. Bank Trust National Association as the Issuing and Paying Agent and authorizing the execution of an Issuing and Paying Agent Agreement, authorizing a Credit Agreement with JPMorgan Chase; and the appointment of Dealer JPMorgan Securities and authorizing the execution of a Commercial Paper Dealer Agreement; approving the payment of issuance costs in connection with the issuance of the short term obligations; approving the use of an Offering Memorandum in connection with the sale of the short term obligations; and providing an effective date by Resolution No. 14-0987; Ordinance No. 29377.
On September 13, 2017, the City Council authorized the execution of the First Amendment to Revolving Credit Agreement; execution of the First Amendment to Fee Letter Agreement with JPMorgan Chase Bank, National Association in support of the City of Dallas, Texas Waterworks and Sewer System Commercial Paper Notes, Series E; and the execution of agreements pertaining thereto and resolving other matters related thereto by Resolution No. 17-1402.
On September 11, 2019, the City Council authorized the execution of the Second Amendment to Revolving Credit Agreement; execution of the Second Amendment to Fee Letter Agreement with JPMorgan Chase Bank, National Association in support of the City of Dallas, Texas Waterworks and Sewer System Commercial Paper Notes, Series E; and execution of agreements pertaining thereto and resolving other matters related thereto by Resolution No. 19-1409.
On May 27, 2020, the City Council authorized the execution of the Third Amendment to Revolving Credit Agreement with JPMorgan Chase, National Association; in support of the City of Dallas, Texas Waterworks and Sewer System Commercial Paper Notes, Series E; and the execution of agreements pertaining thereto and resolving other matters related thereto by Resolution No. 20-0805.
On February 24, 2021, the City Council authorized the execution of the Fourth Amendment to Revolving Credit Agreement with JPMorgan Chase Bank, National Association in support of the City of Dallas, Texas Waterworks and Sewer System Commercial Paper Notes, Series E; and the execution of agreements pertaining thereto and resolving other matters related thereto by Resolution No. 21-0359.
On June 9, 2021, the City Council authorized the issuance by the City of Dallas of its Waterworks and Sewer System Commercial Paper Notes, Series G, in an aggregate principal amount at any one time outstanding not to exceed $300,000,000, 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; 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 authorizing the execution of a Credit Agreement with State Street Bank and Trust Company; a Dealer Agreement with BofA Securities, Inc.; and an Issuing and Paying Agent Agreement with U.S. Bank 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 providing an effective date by Ordinance No. 31886.
On June 26, 2024, the City Council authorized the execution of the First Amendment to Revolving Credit Agreement with State Street Bank and Trust Company in support of the City of Dallas, Texas Waterworks and Sewer System Commercial Paper Notes, Series G; and the execution of any other agreements pertaining thereto, and resolving other matters related thereto, for a three-month extension from July 8, 2024, to October 4, 2024, by Resolution No. 24-0909.
On September 25, 2024, the City Council authorized the execution of the Second Amendment to Revolving Credit Agreement with State Street Bank and Trust Company in support of the City of Dallas, Texas Waterworks and Sewer System Commercial Paper Notes, Series G; and the execution of any other agreements pertaining thereto, and resolving other matters related thereto, for a three-month extension from October 4, 2024, to January 2, 2025, by Resolution No. 24-1368.
The City Council will be briefed by memorandum regarding this matter on April 4, 2025. <mailto:https://dallascityhall.com/government/citymanager/Documents/FY24-25%20Memos/DWU%20CP%20Series%20G%20Memo%20040225%20(003)%20(2).pdf>
FISCAL INFORMATION
|
Fund |
FY 2025 |
FY 2026 |
Future Years |
|
Dallas Water Utilities Fund |
$1,081,701.00 |
$988,500.00 |
$1,522,799.00 |
M/WBE INFORMATION
In accordance with the City’s Business Inclusion and Development Policy adopted on September 23, 2020, by Resolution No. 20-1430, as amended, the M/WBE participation on this contract is as follows:
|
Contract Amount |
Procurement Category |
M/WBE Goal |
|
$3,593,000.00 |
Other Services |
N/A |
|
M/WBE Subcontracting % |
M/WBE Overall % |
M/WBE Overall Participation $ |
|
N/A |
N/A |
N/A |
|
• This item is Other Services which does not have an availability and disparity goal. |
|
• Bank of America, N.A. - Non-local; Workforce - 0.00% Local |
PROCUREMENT INFORMATION
Method of Evaluation for Award Type:
|
Request for Competitive |
• Utilized for high technology procurements, insurance procurements, and other goods and services |
|
Sealed Proposal |
• Recommended offeror whose proposal is most advantageous to the City, considering the relative importance of price, and other evaluation factors stated in the specifications |
|
|
• Always involves a team evaluation • Allows for negotiation on contract terms, including price |
|
|
|
The Office of Procurement Services received the following proposals from solicitation number BEZ25-00026248. We opened them on November 15, 2024. These service provider agreements are being awarded to the most advantageous proposers.
*Denotes successful proposer for Series G
Proposers Address Score
Commercial Paper Dealers
|
* BofA Securities, Inc. |
One Bryant Park New York, New York 10036 |
92.67% |
|
Jefferies LLC |
520 Madison Avenue New York, NY 10022 |
88.00% |
|
Morgan Stanley |
1585 Broadway, 24th Floor New York, NY 10036 |
86.67% |
|
J.P. Morgan Securities LLC |
383 Madison Avenue, Floor 3 New York, NY 10179 |
84.00% |
|
Loop Capital Markets LLC |
425 South Financial Place Chicago, IL 60605 |
82.67% |
|
Wells Fargo Securities |
30 Hudson Yards, 65th Floor New York, NY 10001 |
81.00% |
|
U.S. Bancorp |
800 Nicollet Mall Minneapolis, MN 55402Lead |
75.00% |
|
PNC Capital Markets LLC |
300 Fifth Avenue Pittsburgh, PA 15222 |
68.00% |
Proposers Address Score
Commercial Paper Liquidity Provider
|
*Bank of America, N.A.One Bryant Park New York, New York 10036 89.80% |
|
|
|
Wells Fargo Bank, N.A. |
101 North Phillips Avenue Sioux Falls, SD 57104 |
82.70% |
|
PNC Bank, N.A. |
200 Crescent Court, Ste. 400 Dallas, TX 75201 |
81.50% |
|
U.S. BANK, N.A. |
1095 Avenue of the Americas New York, NY 10036 |
74.97% |
|
JPMorgan Chase Bank |
383 Madison Avenue, Floor 3 New York, New York 10179 |
72.20% |
|
Sumitomo Mitsui Banking Corporation |
277 Park Avenue New York, New York 10172 |
67.53% |
|
Morgan Stanley |
1585 Broadway, 16 Floor New York, NY 10036 |
5.00% |
OWNER/EXECUTIVE
Bank of America, N.A. is a wholly owned subsidiary of Bank of America Corporation
Brian Moynihan, Chairman of the Board