1 00:00:00,000 --> 00:00:11,960 Okay you're on. It is nine o'clock and it's Monday November 9th 2020. We have a virtual 2 00:00:11,960 --> 00:00:17,760 forum so we'll begin the meeting of the Public Utilities Board for the City of Denton. The 3 00:00:17,760 --> 00:00:25,520 first item is the consent agenda. Does any board member wish to pull an item? I do. Okay 4 00:00:25,520 --> 00:00:35,360 Russ? I'd like to pull item C as in China. Okay and Billy I saw your hand up. A is an 5 00:00:35,360 --> 00:00:41,320 apple. Any other board members wishing to pull? All right and do we have a motion to 6 00:00:41,320 --> 00:00:51,080 approve items B, D, E, F, and G? So moved. This is Charlie. Do we have a second? Looks 7 00:00:51,080 --> 00:00:57,920 like Ed is seconding. Is that correct Ed? Yes it is. Thank you. And all in favor say 8 00:00:57,920 --> 00:01:09,960 aye. Aye. Opposed? That carries. Item A. Let's do that one first. I'd just like an explanation 9 00:01:09,960 --> 00:01:17,600 is all. I don't understand why they were rejected honestly. So Billy this is Tony. We have Jerry 10 00:01:17,600 --> 00:01:22,880 coming up here with DME but I can tell you that part of the reason we're rejecting that 11 00:01:22,880 --> 00:01:31,400 is that you know with the decision to not construct that facility on that property we 12 00:01:31,400 --> 00:01:36,840 were required by state law to give the previous owner an opportunity to repurchase that and 13 00:01:36,840 --> 00:01:42,520 so we didn't want to move forward with demolishing those buildings and potentially impacting the 14 00:01:42,520 --> 00:01:48,400 value of that property. If after six months you know the previous owner decides not to 15 00:01:48,400 --> 00:01:52,360 purchase the property then we'll go ahead and move forward with rebidding that and coming 16 00:01:52,360 --> 00:01:56,760 back and demolishing those structures and then having discussion with the PUB and with 17 00:01:56,760 --> 00:02:02,080 the council on what to do with the property. Okay so Jerry's on here. I don't know if Jerry 18 00:02:02,080 --> 00:02:11,520 has anything else to add. You're on mute. I saw you shake your head. Pretty much covers 19 00:02:11,520 --> 00:02:22,400 it. Thank you. Okay well there's no more questions that I move approval. All in favor say aye. 20 00:02:22,400 --> 00:02:33,340 Aye. Item C as in China. Yes my question on this item C and item D were both for Schweitzer 21 00:02:33,340 --> 00:02:41,280 instrumentation and my question on C is I think this is only for fabrication of the 22 00:02:41,280 --> 00:02:49,260 steel cabinets in which items on the and C on excuse me on D are going to be installed. 23 00:02:49,260 --> 00:02:57,120 Is that correct? That is correct. Okay are all of the four bids that you received for 24 00:02:57,120 --> 00:03:06,440 item C will they accept the Schweitzer electrical components? Since they're custom built to 25 00:03:06,440 --> 00:03:13,560 that that they'll build them to the Schweitzer components? Okay so if they will all accept 26 00:03:13,560 --> 00:03:20,700 that in looking at this the lowest price was what was recommended $230,000 for building 27 00:03:20,700 --> 00:03:29,240 these steel cabinets in Mexico. The lowest price American fabrication was $7,000 more 28 00:03:29,240 --> 00:03:38,200 than that. So instead of $230,000 we would spend $237,000 to get them made in the USA 29 00:03:38,200 --> 00:03:45,080 correct? Yes sir. In my opinion we should support American workers and the difference 30 00:03:45,080 --> 00:03:52,640 between $230,000 and $237,000 is three percent approximately and in the overall scheme of 31 00:03:52,640 --> 00:03:58,320 things I think it's it's worthwhile to pay a little bit more to support American workers 32 00:03:58,320 --> 00:04:05,280 in fabricating these cabinets. So I would recommend we rethink that recommendation and 33 00:04:05,280 --> 00:04:10,360 I would recommend we go with an American source there. You're basically your number two guy 34 00:04:10,360 --> 00:04:16,480 on the on the list. Yes sir I mean we chose the the least expensive option. I understand 35 00:04:16,480 --> 00:04:23,600 I understand that and if it was my money personally I would spend the extra $7,000 if I was looking 36 00:04:23,600 --> 00:04:30,840 to spend that much money anyway. $237,000 as opposed to $230,000. I think it's worth 37 00:04:30,840 --> 00:04:39,440 a small premium to support American workers. That's that's my opinion. Thank you. And 38 00:04:39,440 --> 00:04:43,440 I'm going to look at Larry to see if Larry can you know is able to weigh in on this for 39 00:04:43,440 --> 00:04:50,600 us but I will tell you I think the the the state statute does you know prohibit the city 40 00:04:50,600 --> 00:04:57,200 doing business with certain countries I don't think Mexico is one of them there's also reciprocity 41 00:04:57,200 --> 00:05:02,700 at times between states that that you can use when you're doing bids. In this particular 42 00:05:02,700 --> 00:05:09,440 case I don't believe unless Larry knows any different that that we would be you know I 43 00:05:09,440 --> 00:05:14,700 think we would be prohibited to award this to anyone else other than the lowest responsive 44 00:05:14,700 --> 00:05:20,500 and qualified bidder and so I don't think I mean well I appreciate your your comments. 45 00:05:20,500 --> 00:05:24,680 I'm not sure that from a state law perspective there's anything that we can do here other 46 00:05:24,680 --> 00:05:31,040 than to award to to to the lowest qualified bidder or to reject all bids and then go back 47 00:05:31,040 --> 00:05:35,680 out or re-bid it. Thank you for that Tony because I was going to ask the same question 48 00:05:35,680 --> 00:05:41,860 Larry is that that's correct. I agree and if it if it's pleasure of the PUB to have 49 00:05:41,860 --> 00:05:50,060 us look at different alternatives on how to acquire purchases and different things y'all 50 00:05:50,060 --> 00:05:56,600 want to consider in what's going out for bid we can we can consider that and if we it if 51 00:05:56,600 --> 00:06:04,360 you want us to come back and discuss that more detail we can do that as well. The matter 52 00:06:04,360 --> 00:06:10,560 this one went out I mean it doesn't allow us to the PUB to do anything other than what 53 00:06:10,560 --> 00:06:16,640 Tony just suggested. Well and one quick correction that David just brought to my attention so 54 00:06:16,640 --> 00:06:22,600 this was done as an RFP so it wasn't done as the low bid meets qualifications but again 55 00:06:22,600 --> 00:06:27,680 I think in this particular case at this point really the only thing you can do is to reject 56 00:06:27,680 --> 00:06:33,240 all the proposals and then start again although you won't necessarily be able to put in a 57 00:06:33,240 --> 00:06:38,120 requirement that they have to be manufactured in in the U.S. Now I'll tell you there are 58 00:06:38,120 --> 00:06:43,040 some federal grants that do require by America but in this particular case there there's 59 00:06:43,040 --> 00:06:50,880 that this is not a grant and so those things would just not be allowed. So was price the 60 00:06:50,880 --> 00:06:56,600 only consideration on the RFP? No there was other there was other other components I don't 61 00:06:56,600 --> 00:07:03,240 have those in front of me. So we do have we do have Christine Taylor on on the phone she 62 00:07:03,240 --> 00:07:10,920 can address that if you'd like. Yes the other the other categories considered for this RFP 63 00:07:10,920 --> 00:07:17,720 were the price total cost which was 50 percent of the evaluation project delivery was 15 64 00:07:17,720 --> 00:07:23,520 percent compliance with the specifications was 25 percent and then probable performance 65 00:07:23,520 --> 00:07:35,240 of the grant as well. Yeah I didn't catch that I'm glad you pointed that out. I think 66 00:07:35,240 --> 00:07:43,400 those other factors one of them wasn't by part of by America maybe that's a philosophy 67 00:07:43,400 --> 00:07:52,520 that the council needs to take up and we could suggest that. Yes I think I think without 68 00:07:52,520 --> 00:07:58,840 a policy like that in place we kind of have to go with the current rules. Correct I agree 69 00:07:58,840 --> 00:08:06,520 with you Karen. And I agree with Billy that that might be something council could consider. 70 00:08:06,520 --> 00:08:15,480 I'd like us to add that if we could if you guys are willing. To add that as a recommendation 71 00:08:15,480 --> 00:08:24,960 Billy. Yes. Okay purchasing can definitely look into that as a future requirement or 72 00:08:24,960 --> 00:08:36,520 a category that can score additional points for evaluation. We all say at the same time. 73 00:08:36,520 --> 00:08:50,120 All right any further discussion. Have a motion to approve item C. So moved. Do we have a 74 00:08:50,120 --> 00:09:04,920 second. Second. Thank you Ed. All in favor say aye. Aye. Opposed. Opposed. I guess I'm 75 00:09:04,920 --> 00:09:10,240 curious because I yeah just want to raise to make sure it's it's point out I think that 76 00:09:10,240 --> 00:09:16,480 way we know it has to be approved if they want to purchase it under his current form. 77 00:09:16,480 --> 00:09:23,720 And Susan just to clarify so Charlie did you abstain on that vote. I didn't hear you say. 78 00:09:23,720 --> 00:09:32,440 I was thinking I was on mute so I just waved to the I will go down as I. Okay so 14 okay. 79 00:09:32,440 --> 00:09:39,560 I'm an I. Karen's an I. Charlie's an I. Ed's an I. And Billy and Russard no. Correct that's 80 00:09:39,560 --> 00:09:46,720 correct. Okay. For two. All right. Thank you. Next item is consider approval of the October 81 00:09:46,720 --> 00:09:56,640 26 2020 minutes. Are there any changes or corrections. Okay do we have a motion to approve the minutes. 82 00:09:56,640 --> 00:10:06,920 So moved. Thank you. And a second. Second. All in favor say aye. Aye. Motion carries. 83 00:10:06,920 --> 00:10:12,400 Item B. Consider recommending adoption of an ordinance city of debt in Texas authorizing 84 00:10:12,400 --> 00:10:16,840 the expenditure of funds for the payment of wholesale transmission charges in the total 85 00:10:16,840 --> 00:10:21,360 amount of seven million one hundred and eighty one thousand thirty nine dollars and seventy 86 00:10:21,360 --> 00:10:26,320 three cents and providing an effective date. Good morning chair. P.B. members Nick Benson 87 00:10:26,320 --> 00:10:41,180 assistant director of finance let me get the presentation pulled up really quick. All right. 88 00:10:41,180 --> 00:10:46,320 So a couple of slides to review the transmission charges for didn't municipal electric each 89 00:10:46,320 --> 00:10:49,560 year through the approval process we do bring this forward to the public utility board and 90 00:10:49,560 --> 00:10:55,400 city council. What this does is authorizes us to pay other transmission service providers 91 00:10:55,400 --> 00:11:00,520 for DME share of transmission assets. And says that this item is for approximately seven 92 00:11:00,520 --> 00:11:06,560 point two million. Listed in this chart are the entities of the service providers that 93 00:11:06,560 --> 00:11:10,360 will be making these payments to on a monthly basis. So the first one you can see cross 94 00:11:10,360 --> 00:11:16,040 Texas transmission of four hundred thousand. Moving down the row you can see encore NTU 95 00:11:16,040 --> 00:11:23,040 for one point two and then total seven point two million. So we want to do is give you 96 00:11:23,040 --> 00:11:27,040 a little bit of history of payments that have been made in the past. We broke it into two 97 00:11:27,040 --> 00:11:31,720 different categories those from zero to fifty thousand and then those fifty thousand and 98 00:11:31,720 --> 00:11:37,440 over. It is important to note anything between zero and fifty thousand or under fifty thousand 99 00:11:37,440 --> 00:11:42,120 is approved by staff. These do not come forward to the public utility board or city council 100 00:11:42,120 --> 00:11:47,120 for approval. Some of these you can see your wood county electric cooperative for fifteen 101 00:11:47,120 --> 00:11:51,200 hundred dollars for example and you see Grayson calling electric cooperative for seventy two 102 00:11:51,200 --> 00:11:55,960 hundred. So last fiscal year nineteen twenty we paid about twenty seven thousand seven 103 00:11:55,960 --> 00:12:02,080 hundred dollars in those transmission payments to entities below fifty thousand. What we 104 00:12:02,080 --> 00:12:07,480 wanted to show you was really what was the amount we paid over fifty thousand to each 105 00:12:07,480 --> 00:12:11,600 one of these entities that are in front of you today. So you see cross Texas transmission 106 00:12:11,600 --> 00:12:16,600 of three hundred seventy thousand and you can see encore for a million eighty thousand 107 00:12:16,600 --> 00:12:20,360 and then moving down you can see the total of six point five million. So we're a little 108 00:12:20,360 --> 00:12:24,560 bit under that seven million dollar threshold that we are seeking your approval for today 109 00:12:24,560 --> 00:12:31,800 but these were the actuals for nineteen twenty. With that I will take any questions you have. 110 00:12:31,800 --> 00:12:42,640 I have a question on the can you go put the slide back up you had right before the question 111 00:12:42,640 --> 00:12:58,920 slide. Hang on just a second. Oh okay. Yeah. That one the the entities in the right column 112 00:12:58,920 --> 00:13:07,600 how many of those are investor owned entities. Do you know. No sir I don't know that. I'm 113 00:13:07,600 --> 00:13:12,240 Terry Terry or naughty is present today that may can address that question but you don't 114 00:13:12,240 --> 00:13:18,280 have that on the top of my head. I recognize Texas municipal public municipal power agency 115 00:13:18,280 --> 00:13:23,800 that's a four owned by four cities and then the lower Colorado River Authority that's 116 00:13:23,800 --> 00:13:33,760 also somewhat of a public thing. I'm not familiar with the other companies listed. I believe 117 00:13:33,760 --> 00:13:40,120 that Texas TNPA and lower Colorado are probably the only local governments if you will the 118 00:13:40,120 --> 00:13:48,640 other ones should be investor owned utilities. Okay. That was my only question. Okay. Yes 119 00:13:48,640 --> 00:13:58,520 go ahead. This is I'm just curious as to with something like if in the future if the city 120 00:13:58,520 --> 00:14:06,640 had more distributed energy resources like solar its own solar or battery storage would 121 00:14:06,640 --> 00:14:15,000 that reduce these expenses. Let me Terry now he's going to come up and address that question 122 00:14:15,000 --> 00:14:26,120 and Mr. Salf hang on just a second. Thanks. Morning QB Terry Nolte assistant general manager 123 00:14:26,120 --> 00:14:36,120 DME. Yes the installation of small distributed generation such as rooftop solar does reduce 124 00:14:36,120 --> 00:14:45,780 our total transmission cost because it lowers our it's called the four coincident peak exposures. 125 00:14:45,780 --> 00:14:55,360 These charges are based upon the four hourly coincident peaks on each year. So it's calculated 126 00:14:55,360 --> 00:15:03,440 actually one year in arrears. So to the extent that more solar rooftop would be on our percentage 127 00:15:03,440 --> 00:15:13,760 of total demand for the total ERCOT system would drop. Okay. Thanks very much. Did anybody 128 00:15:13,760 --> 00:15:26,720 else have a question. All right. We have a motion to approve item B. So we approve Russell 129 00:15:26,720 --> 00:15:37,280 move change me to second. Okay. All in favor say aye. Aye. Opposed. Okay. Next item is 130 00:15:37,280 --> 00:15:42,320 consider recommending the adoption of an ordinance of the city of Denton a Texas home real municipal 131 00:15:42,320 --> 00:15:47,800 corporation authorizing the city manager or his designee to execute a contract with rush 132 00:15:47,800 --> 00:15:53,880 truck centers of Texas LP through the buy board cooperative purchasing network contract 133 00:15:53,880 --> 00:16:00,040 number 601 dash 19 for the purchase of Peterbilt trucks for the various city departments providing 134 00:16:00,040 --> 00:16:08,240 for the expenditure funds therefore in providing effective dates in the five year not to exceed 135 00:16:08,240 --> 00:16:23,360 amount of 20 million dollars morning chair members of the board Terry cater fleet superintendent 136 00:16:23,360 --> 00:16:41,600 if the presentation pulls up here momentarily figure out how to do that. 137 00:16:41,600 --> 00:17:04,560 There we go. This contract is for the purchase of Peterbilt trucks through rush truck centers. 138 00:17:04,560 --> 00:17:09,960 Just a little background on rush truck. If you're not familiar there are the authorized 139 00:17:09,960 --> 00:17:13,680 distributor of new Peterbilt products for the state of Texas. They've been around since 140 00:17:13,680 --> 00:17:20,960 1965. They have a large presence in Texas as you can imagine with 23 locations and the 141 00:17:20,960 --> 00:17:25,840 near service centers to us are Irving and Fort Worth. We typically use the Irving service 142 00:17:25,840 --> 00:17:32,800 center. We use them currently for repairs and warranty work. They also have a support 143 00:17:32,800 --> 00:17:37,720 center called custom vehicle solutions right here in Denton next to the Peterbilt manufacturing 144 00:17:37,720 --> 00:17:43,480 facility that we also can access. It's a very nearby facility. They've been in business 145 00:17:43,480 --> 00:17:49,420 since 2011 and they're just a support system for both the plant and rush truck centers 146 00:17:49,420 --> 00:17:54,160 and a little bit about Peterbilt motors. Most of you probably know more about the history 147 00:17:54,160 --> 00:18:01,200 of this company than I do. They opened their plant here in Denton in 1980 brought their 148 00:18:01,200 --> 00:18:07,560 headquarters in in 1993. They currently have more than 1500 employees and they produce 149 00:18:07,560 --> 00:18:13,120 about 100 and they have the capacity to produce about 130 trucks per day and you can see the 150 00:18:13,120 --> 00:18:20,040 total production this year. A little bit about the city's Peterbilt inventory. We currently 151 00:18:20,040 --> 00:18:27,980 run about 125 Peterbilt trucks of various models and makes with various vocational bodies 152 00:18:27,980 --> 00:18:34,120 on them and you can see Solid Waste is one of the largest users of the Peterbilt truck 153 00:18:34,120 --> 00:18:40,140 product. We use them in all lines of their operation from front load trucks to automated 154 00:18:40,140 --> 00:18:48,560 side loads to rear loaders to roll offs and commercial side loads as well. So all different 155 00:18:48,560 --> 00:18:53,480 locations there. You can see the public works department uses a number of their trucks. 156 00:18:53,480 --> 00:18:58,000 These are primarily going to be dump trucks on the bodies on these trucks as well as the 157 00:18:58,000 --> 00:19:08,160 water department and we have a few miscellaneous other applications water trucks and some specialty 158 00:19:08,160 --> 00:19:16,840 items as well. A little bit on the purchase history. This is from 2016 to 2020. We you 159 00:19:16,840 --> 00:19:22,800 could say we average about 13 trucks a year. We had a really low year in 2016. If you took 160 00:19:22,800 --> 00:19:30,280 that out the average is going to be up around 14. This year for 2021 is not in this chart 161 00:19:30,280 --> 00:19:37,960 but I think it is in the AIS. We're planning on purchasing 16 trucks that are all capable 162 00:19:37,960 --> 00:19:44,240 of being put on a Peterbilt chassis if we so desired to do that. The average annual 163 00:19:44,240 --> 00:19:49,920 spend here is right around three million dollars over the past. I think this year we're looking 164 00:19:49,920 --> 00:19:57,720 at about 3.7 for the 16 trucks that we have planned. 14 of those are fleet replacements 165 00:19:57,720 --> 00:20:04,680 and two of those are fleet additions for this current year. Just want to put a slide in 166 00:20:04,680 --> 00:20:10,280 here to show you a little bit about Peterbilt's future of trucks and they are working on some 167 00:20:10,280 --> 00:20:16,080 electric models. They have them under development right now. They are in limited production 168 00:20:16,080 --> 00:20:22,720 and they have three different models, a 220, a 520, and a 567. The 520 pictured here is 169 00:20:22,720 --> 00:20:30,000 the workhorse for a refuse fleet primarily and it has an 80 mile range. Of course the 170 00:20:30,000 --> 00:20:36,320 advantage is reduced maintenance cost and zero emissions but there are a lot of factors 171 00:20:36,320 --> 00:20:41,380 to consider and fleet is considering this whenever we have a truck up for replacement. 172 00:20:41,380 --> 00:20:47,480 Is there an application that fits the operational need of the department? How reliable is that 173 00:20:47,480 --> 00:20:52,480 application? Has it been tested? And of course cost is another factor. We know these trucks 174 00:20:52,480 --> 00:20:58,900 are going to be expensive at first and I think one of the reasons for limited production 175 00:20:58,900 --> 00:21:05,960 as production schedules increase the price will go down on these trucks and currently 176 00:21:05,960 --> 00:21:11,640 I'm working with a Peterbilt plant to partnership with them on getting one of these 520s in 177 00:21:11,640 --> 00:21:16,480 service here in Denton if we can work out an agreement where we wouldn't have to purchase 178 00:21:16,480 --> 00:21:23,040 100% of the price of that truck. I think it would be a win-win for the plant as well as 179 00:21:23,040 --> 00:21:30,160 fleet in the city. So they would give us a test. Of course these trucks have been vetted. 180 00:21:30,160 --> 00:21:34,920 They've been run extensively out on the west coast. Of course they have a little different 181 00:21:34,920 --> 00:21:37,840 operation out there and that's why we want to make sure that they would work for any 182 00:21:37,840 --> 00:21:44,320 of our applications before we just jumped in and purchased them. 183 00:21:44,320 --> 00:21:50,240 The benefits of the contract as with anything when you standardized you're reducing your 184 00:21:50,240 --> 00:21:56,260 part stocking. It's just more efficient. Training is more efficient. Diagnostic software and 185 00:21:56,260 --> 00:22:02,480 specialty tools and the procurement savings are reduced staff time. We get faster delivery 186 00:22:02,480 --> 00:22:08,080 from planning to delivery when we have a contract already in place. Current buy board contract 187 00:22:08,080 --> 00:22:14,240 has already been bid at 601-19 and that is for the base model trucks on all of these 188 00:22:14,240 --> 00:22:23,640 applications. I'd be happy to try to answer any questions you might have. 189 00:22:23,640 --> 00:22:32,180 Terry I assume that the actual when it comes down to replacing each individual vehicle 190 00:22:32,180 --> 00:22:37,800 you would go through the same index calculation that you used in the past on whether something 191 00:22:37,800 --> 00:22:42,000 is needs to be replaced. Makes sense to be replaced. Is that right? 192 00:22:42,000 --> 00:22:46,040 That's true and that's why it's really hard to predict the future. I use the history of 193 00:22:46,040 --> 00:22:52,160 our truck replacements. It's hard to predict the future because we do that each and every 194 00:22:52,160 --> 00:22:56,960 replacement to make sure that it really needs to be replaced and then look at the application 195 00:22:56,960 --> 00:23:01,000 and see what does it need to be replaced with. 196 00:23:01,000 --> 00:23:10,000 I assume the 80 mile capacity for one of these trucks compared to the 200 mile capacity. 197 00:23:10,000 --> 00:23:14,800 I assume the bigger the truck the shorter the range. Is that right? 198 00:23:14,800 --> 00:23:19,000 That's part of it. I think the other is the application the vocational body that's attached 199 00:23:19,000 --> 00:23:25,760 to that truck. In this case we're looking at a 66,000 pound refuse truck that's going 200 00:23:25,760 --> 00:23:31,960 to consume power starting to stop at a greater rate than some of the other applications. 201 00:23:31,960 --> 00:23:37,040 Ed I think you got your hand up. 202 00:23:37,040 --> 00:23:43,080 Yeah I was just curious if there was an opportunity here to add to the city's hybrid fleet. I 203 00:23:43,080 --> 00:23:49,400 don't know if Peterbilt's still building their hybrids but if they were if that were a consideration. 204 00:23:49,400 --> 00:23:54,640 Well I did check into that sir. They currently are not producing any hybrid trucks. I think 205 00:23:54,640 --> 00:24:00,000 their focus has been on all electric. We did run some of their hybrids in the past. Now 206 00:24:00,000 --> 00:24:05,400 they do have some outside companies that are making an add-on system to convert a Peterbilt 207 00:24:05,400 --> 00:24:10,200 truck or any other manufacturer to a hybrid drive system but we haven't really looked 208 00:24:10,200 --> 00:24:14,960 into what those we are looking into it but I haven't gotten any information on what that 209 00:24:14,960 --> 00:24:20,920 system consists of and how much it actually improves the operation of the truck. 210 00:24:20,920 --> 00:24:31,160 Thank you. Other questions? All right do we have a motion to approve? Move for approval. 211 00:24:31,160 --> 00:24:41,560 Second. Okay we'll give that one to Karen. All in favor say aye. Aye. Closed. All right 212 00:24:41,560 --> 00:24:49,000 thank you Terry. Thank you very much. All right management reports. So management reports 213 00:24:49,000 --> 00:24:54,280 we do have a couple of memos that went out to you from our solid waste department. Brian 214 00:24:54,280 --> 00:24:59,960 Borner is here if you have any questions regarding the relocation or the status of the relocation 215 00:24:59,960 --> 00:25:05,160 of the North Lake Recycling Center and also regarding outside waste haulers. So if there 216 00:25:05,160 --> 00:25:10,720 are any questions regarding those Brian is here and can can respond to you. Go ahead 217 00:25:10,720 --> 00:25:20,240 Ed. Yeah first of all thank you for the response regarding 90 percent of the city's serviced 218 00:25:20,240 --> 00:25:31,400 have curbside recycling or recycling collection sites. My question is which cities comprise 219 00:25:31,400 --> 00:25:41,120 the 10 percent that don't have those services and who are the haulers who are bringing in 220 00:25:41,120 --> 00:25:47,080 those cities garbage to the land? I do not have that information at my fingertips right 221 00:25:47,080 --> 00:25:53,400 now but I can provide that at later date. What I can tell you is that those are communities 222 00:25:53,400 --> 00:26:02,240 that are very isolated very small in the fringes of the North Texas and DFW areas. One that 223 00:26:02,240 --> 00:26:08,480 does come to mind is the city of Bridgeport. It does not have a curbside or centralized 224 00:26:08,480 --> 00:26:20,080 recycling program. Okay I'd appreciate the information thank you. Thank you. Okay if 225 00:26:20,080 --> 00:26:26,120 no other questions on on the memos I want to go through the future agenda items. They 226 00:26:26,120 --> 00:26:32,720 have one correction on here for the the utility budgets and rate discussions. I know the council 227 00:26:32,720 --> 00:26:39,440 did redo their schedule and so so that we can keep things pretty much in line with that 228 00:26:39,440 --> 00:26:45,120 we're going to push that budget discussion rate discussion to to January and and that 229 00:26:45,120 --> 00:26:49,880 way we can as soon as we get have that presentation with POB we can get in front of the council 230 00:26:49,880 --> 00:26:55,040 so that'll be the only change on that and then we did have a couple of items for you 231 00:26:55,040 --> 00:27:01,920 on the new business action matrix. We're gonna you know as you're asking questions and making 232 00:27:01,920 --> 00:27:05,800 requests we're gonna make sure we get these on here as quickly as we can but there we 233 00:27:05,800 --> 00:27:12,020 do have three items on here and we still have them for TDB but but we did add them mostly 234 00:27:12,020 --> 00:27:18,200 related to the solid waste. So and then one of the item that I that I have for you is 235 00:27:18,200 --> 00:27:24,480 a follow-up I'll turn it over to Larry we do want to provide some clarification on recusals 236 00:27:24,480 --> 00:27:28,400 on consent agenda items. There was a follow-up from the last meeting so I'll just turn over 237 00:27:28,400 --> 00:27:35,120 to Larry he can explain kind of what that process is for you. As the members know in 238 00:27:35,120 --> 00:27:39,920 the past when we would meet in person you'd you'd fill out a form when you're recusing 239 00:27:39,920 --> 00:27:45,160 from a vote and we'd like to we need to get back to doing that in a virtual setting and 240 00:27:45,160 --> 00:27:51,680 so we're gonna be establishing a procedure to do that by email so if when you review 241 00:27:51,680 --> 00:27:56,240 the agenda ahead of the meeting if you would let Kim know which you're gonna what what 242 00:27:56,240 --> 00:28:00,720 items you're gonna be recusing from or abstaining from that we could document that and I'll 243 00:28:00,720 --> 00:28:10,280 give you the language to be able to put the email on that. Thank you. Susan that wraps 244 00:28:10,280 --> 00:28:16,200 up unless there's any other questions on management update. Okay that brings us to concluding 245 00:28:16,200 --> 00:28:22,120 items does any board member wish to have something added to a future agenda item or maybe the 246 00:28:22,120 --> 00:28:30,840 discussion or that we had earlier about the buy America. Okay yeah I agree that makes 247 00:28:30,840 --> 00:28:40,800 sense. That's that's something I think the council should take a serious look at. Anything 248 00:28:40,800 --> 00:28:48,360 else all right let's move into work session receive a report and hold a discussion and 249 00:28:48,360 --> 00:28:53,680 give staff direction regarding the implementation of a hundred million utility system extendable 250 00:28:53,680 --> 00:28:59,840 commercial paper program. Good morning everyone David Gaines assistant city manager let me 251 00:28:59,840 --> 00:29:12,800 pull the presentation up. So this this presentation is gonna it will discuss the possible extended 252 00:29:12,800 --> 00:29:18,120 commercial paper program to help man as a tool to help manage our utilities capital 253 00:29:18,120 --> 00:29:22,200 program. The presentation is fairly detailed so I'll try to get through it as quick as 254 00:29:22,200 --> 00:29:28,840 I can but I will say we have our financial advisors in our bond council on the line so 255 00:29:28,840 --> 00:29:32,960 if there are any specific questions as we go through this I think we're in good hands 256 00:29:32,960 --> 00:29:39,040 to answer those. So I'll start off here and then start to describe what this program is 257 00:29:39,040 --> 00:29:46,360 and how it could be a tool for us as we manage our capital program. The history of our commercial 258 00:29:46,360 --> 00:29:51,040 paper program really goes back to the beginning of this fiscal year or this calendar year 259 00:29:51,040 --> 00:29:58,720 and follow up to our to the bond program that was passed by the voters last November. The 260 00:29:58,720 --> 00:30:03,480 obviously as you all know are the bond the bond election November approved the largest 261 00:30:03,480 --> 00:30:10,000 bond program in the city's history and so as part of that as we looked at how can we 262 00:30:10,000 --> 00:30:16,680 manage the the debt issuance and in conjunction with that program and really try to manage 263 00:30:16,680 --> 00:30:22,880 the tax rate implications and everything associated we we went to council and council ultimately 264 00:30:22,880 --> 00:30:27,520 approved a commercial paper program which I'll go through in detail of what it is but 265 00:30:27,520 --> 00:30:35,740 intended to issue debt in accordance with cash flow as opposed to issuing debt so that 266 00:30:35,740 --> 00:30:41,760 we have funds available for contracts as we as we move forward with the bond program. 267 00:30:41,760 --> 00:30:46,560 By doing that it's really allowed us to flatten out the tax rate increases and not sit on 268 00:30:46,560 --> 00:30:51,680 unused bond funds so that's where that's that's the history of how we've used the programs 269 00:30:51,680 --> 00:30:57,400 thus far on the general government side and so as it's been successful and as we've seen 270 00:30:57,400 --> 00:31:02,160 how it's implemented we step back and to really see how it would make a lot of sense to do 271 00:31:02,160 --> 00:31:09,240 the same thing on the utility side so that we could again help manage our cash flow our 272 00:31:09,240 --> 00:31:15,200 debt issuance on the utility side try to avoid any rate increases sooner than necessary and 273 00:31:15,200 --> 00:31:20,080 match our debt issuance with our commercial paper with our capital program so as I go 274 00:31:20,080 --> 00:31:24,760 through the presentation that's really the backdrop to why we looked at this tool for 275 00:31:24,760 --> 00:31:31,880 the utility system so again there's that that background on when council initially approved 276 00:31:31,880 --> 00:31:38,800 in April the program from the general government side for the bond program. 277 00:31:38,800 --> 00:31:43,760 So you know I mentioned the debt schedules and how and how this this tool ends up helping 278 00:31:43,760 --> 00:31:49,360 and really it comes down to the appropriation authority state law requires that before we 279 00:31:49,360 --> 00:31:55,440 enter into any contract we have to have the money available for that contract so without 280 00:31:55,440 --> 00:31:59,400 it without without this program that we're putting forward today we would have to issue 281 00:31:59,400 --> 00:32:03,760 all those funds up front again before we could enter into any contract this is the tool that 282 00:32:03,760 --> 00:32:08,000 allows us to match it more with cash flow you know we have that potential to build up 283 00:32:08,000 --> 00:32:15,480 balances on beyond unused funds and it could lead to accelerated rate increases so I want 284 00:32:15,480 --> 00:32:20,400 to draw out exactly what that could look like with a with a potential example coming up 285 00:32:20,400 --> 00:32:25,680 here in a few years obviously one of our largest projects on the utility side the largest project 286 00:32:25,680 --> 00:32:30,840 over the next five to ten years would be our water the water treatment plant so as we look 287 00:32:30,840 --> 00:32:35,640 at that let's say this is again this is our traditional example how we would handle things 288 00:32:35,640 --> 00:32:40,440 right now with all the tools that we currently have in place let's say we have to issue our 289 00:32:40,440 --> 00:32:47,680 initial debt for that large project in FY 27 we would issue the entire we would take 290 00:32:47,680 --> 00:32:53,380 out that for the entire 85 million for that project in the in the first year again with 291 00:32:53,380 --> 00:32:58,520 some assumptions for just for ease of example for all those contracts that we would have 292 00:32:58,520 --> 00:33:04,160 to enter into that project obviously is going to last multiple years so we would be taking 293 00:33:04,160 --> 00:33:09,760 out all those funds in the first year while knowing that we're not going to spend all 294 00:33:09,760 --> 00:33:15,280 those funds on a cash flow basis over three years so as I get more into the tool here 295 00:33:15,280 --> 00:33:20,600 in the next couple of slides that's really is intended to match that so we don't have 296 00:33:20,600 --> 00:33:25,760 to take out that entire 85 million in this example and sit on multiple tens of millions 297 00:33:25,760 --> 00:33:33,720 of dollars for a number of years that aren't necessary at the time so now I'll get into 298 00:33:33,720 --> 00:33:39,000 what is commercial paper and how can this be a tool for us commercial paper short-term 299 00:33:39,000 --> 00:33:45,240 notes with a maximum maturity of 270 days it's obviously opposed to the long-term debt 300 00:33:45,240 --> 00:33:50,640 that we normally issue commercial paper is typically used as interim financing with the 301 00:33:50,640 --> 00:33:57,120 proceeds used for the same types of capital projects so this would really be tied to our 302 00:33:57,120 --> 00:34:01,040 utility capital program you see that there in a third bullet any project that we would 303 00:34:01,040 --> 00:34:06,200 use commercial paper for would be authorized in our capital program through the budget 304 00:34:06,200 --> 00:34:11,000 annual budget process. 305 00:34:11,000 --> 00:34:18,360 The commercial program is revolving and that means that we can appropriate or issue the 306 00:34:18,360 --> 00:34:25,920 notes to repay or reappropriate up to an authorized maximum of the program which that's a hundred 307 00:34:25,920 --> 00:34:29,200 million hundred million dollars in the program that we're putting forward so that would be 308 00:34:29,200 --> 00:34:35,680 the max that we could use commercial paper for or use for appropriation purposes. 309 00:34:35,680 --> 00:34:41,520 So we have a chart here in a moment that will help lay this out but if we were going to 310 00:34:41,520 --> 00:34:48,200 take out a 270-day commercial paper program in the traditional sense we would have that 311 00:34:48,200 --> 00:34:54,320 short-term financing for 270 days and then at the end of that 270 days we would even 312 00:34:54,320 --> 00:34:59,880 pay it off for cash we would refinance it with long-term bonds or we would roll it over 313 00:34:59,880 --> 00:35:07,800 to another short-term vehicle that it's important to lay out exactly how commercial paper works 314 00:35:07,800 --> 00:35:14,160 if we were going to issue the the funds themselves but I think this last point is is the most 315 00:35:14,160 --> 00:35:20,440 important for how we plan on actually using the commercial paper contracts approved using 316 00:35:20,440 --> 00:35:25,920 appropriation authority provided by commercial paper will obligate your council to issue 317 00:35:25,920 --> 00:35:34,520 debt so we don't plan our plan is not to actually issue the commercial paper issue this short-term 318 00:35:34,520 --> 00:35:41,860 financing for projects as we lay out our capital plan our plan is to use the appropriation 319 00:35:41,860 --> 00:35:48,120 authority that comes with commercial paper so that we can issue long-term debt in association 320 00:35:48,120 --> 00:35:53,240 with associated with the cash flow and again I have we have a couple of table the charts 321 00:35:53,240 --> 00:35:57,400 and in the next few slides that hopefully will help articulate that better and obviously 322 00:35:57,400 --> 00:36:04,480 can answer any questions as we move forward so what are the benefits of this commercial 323 00:36:04,480 --> 00:36:09,120 paper program of this short-term financing you have immediate access to funds within 324 00:36:09,120 --> 00:36:14,320 one and one to two days you you get that appropriation authority without actually having to issue 325 00:36:14,320 --> 00:36:20,240 notes again that is our our goal with this program as we move forward it is commercial 326 00:36:20,240 --> 00:36:25,360 paper is one of the lowest short-term interest programs with you have some of the lowest 327 00:36:25,360 --> 00:36:31,240 short-term interest rates of other short-term financing vehicles you avoid that negative 328 00:36:31,240 --> 00:36:37,360 interest carry associated with long-term bonds as those years go out and the debt issuance 329 00:36:37,360 --> 00:36:42,640 can more closely align with project timelines again just re-emphasizing the whole goal of 330 00:36:42,640 --> 00:36:52,560 this is to tie our debt our debt financing with our cash flow so let's lay out an example 331 00:36:52,560 --> 00:36:58,800 of how we would use commercial paper we obviously looked at an example previously of in our 332 00:36:58,800 --> 00:37:04,480 current program we would have to issue the entire eighty five million dollars for the 333 00:37:04,480 --> 00:37:09,520 water treatment plant in FY27 despite the fact that we wouldn't spend all those funds 334 00:37:09,520 --> 00:37:15,600 in the first year so this is an example of how we could use the appropriation authority 335 00:37:15,600 --> 00:37:21,120 that comes with commercial paper again without actually issuing the commercial paper we get 336 00:37:21,120 --> 00:37:27,560 the appropriation authority to line that to line up our debt issuance issuance with cash 337 00:37:27,560 --> 00:37:34,080 flow so in this example in FY27 instead of issuing 85 million for all those contracts 338 00:37:34,080 --> 00:37:40,560 we just issued 15 million in FY27 based on the cash flow we would expect in that fiscal 339 00:37:40,560 --> 00:37:49,320 year FY28 we would issue 50 million based on cash flow expected in FY28 and then FY29 340 00:37:49,320 --> 00:37:57,560 issued 20 million for the cash flow expected in that fiscal year again not even issuing 341 00:37:57,560 --> 00:38:04,240 the short-term notes as we talked forward to the previous slides but it's using the 342 00:38:04,240 --> 00:38:10,680 appropriation authority that comes with commercial paper so what does that look like and what 343 00:38:10,680 --> 00:38:15,320 is the goal of this and there's these tables are very basic and there's a number of assumptions 344 00:38:15,320 --> 00:38:23,000 in them but just for for clarity want to show what this means as far as debt service debt 345 00:38:23,000 --> 00:38:29,480 service goes so if you look at our the top table there this just lays out what we saw 346 00:38:29,480 --> 00:38:34,480 what we saw in our two examples the first one would be we issue that entire 85 million 347 00:38:34,480 --> 00:38:41,320 in FY27 and you can see over three years we're issuing 85 million in the second row we're 348 00:38:41,320 --> 00:38:45,840 issuing 85 million over three years but again we're spreading that out over the three fiscal 349 00:38:45,840 --> 00:38:52,440 years to align with cash flow on the bottom table this is just showing our increase in 350 00:38:52,440 --> 00:38:57,480 debt service and just for this example we're assuming we have the same interest rates over 351 00:38:57,480 --> 00:39:01,720 three years that would not be in reality what would happen obviously but i think it just 352 00:39:01,720 --> 00:39:07,920 helps to add as much clarity as we can it's what the benefits of this program are so in 353 00:39:07,920 --> 00:39:13,280 our traditional issuance we would have by issuing all that 85 up front our debt service 354 00:39:13,280 --> 00:39:18,280 associated with that would be roughly six million dollars so we would increase in six 355 00:39:18,280 --> 00:39:23,360 million dollars in our debt service payments in FY27 wouldn't see an increase in FY28 and 356 00:39:23,360 --> 00:39:28,440 29 obviously that six million would just carry forward in those future years over three years 357 00:39:28,440 --> 00:39:34,400 our total would increase six million dollars in debt service payments by using commercial 358 00:39:34,400 --> 00:39:39,320 paper we're just able to spread that increase out so what you see on that second row on 359 00:39:39,320 --> 00:39:44,120 the bottom table are just the increases in debt service obviously they carry forward 360 00:39:44,120 --> 00:39:49,160 but we're able to level out those increases over those first three years where by FY30 361 00:39:49,160 --> 00:39:55,280 we're in the same spot again this is just assuming interest rates stay flat in the same 362 00:39:55,280 --> 00:39:59,280 spot with our debt service increase but we're able to level that out now if we saw this 363 00:39:59,280 --> 00:40:05,480 all the way out to the end of the debt 20 to 30 years depending on the term at the end 364 00:40:05,480 --> 00:40:10,880 we would have those additional payments on the last couple of years because of the way 365 00:40:10,880 --> 00:40:17,880 we're doing this but it allows it to align more closely with cash flow quick question 366 00:40:17,880 --> 00:40:27,280 before we leave that page that last page explain to me on the issuance you show the six point 367 00:40:27,280 --> 00:40:34,840 nine million in year one zero in year two zero in year three zero in year four can you 368 00:40:34,840 --> 00:40:41,880 this is probably a rookie question but what is it that causes the debt service to be zero 369 00:40:41,880 --> 00:40:47,720 after we've entered issued 85 million in debt yeah that that that table was intended just 370 00:40:47,720 --> 00:40:53,520 to show the increase so in FY27 we have an increase of six million and FY28 it would 371 00:40:53,520 --> 00:40:57,160 just carry forward that six million would be there in those in those out years but for 372 00:40:57,160 --> 00:41:02,280 that table I was just trying to show what the year-over-year increase would be to show 373 00:41:02,280 --> 00:41:06,320 that in after three years you're going to be in the same spot you're going to have increased 374 00:41:06,320 --> 00:41:11,600 six million in total in both scenarios so that table wasn't it you could there's a way 375 00:41:11,600 --> 00:41:14,960 you could show that table as a six million over in each year because that six million 376 00:41:14,960 --> 00:41:19,320 is going to carry forward but the purpose of that you're showing the increase each year 377 00:41:19,320 --> 00:41:45,800 and yeah yeah thank you no problem any other questions at this point all right we'll proceed 378 00:41:45,800 --> 00:41:49,600 so what is the issuance process for commercial paper well you start with determining the 379 00:41:49,600 --> 00:41:53,280 cash flow needs obviously and that's going to be aligned with our commercial with our 380 00:41:53,280 --> 00:41:58,720 capital program and then we contact our commercial paper dealer in advance to talk to what is 381 00:41:58,720 --> 00:42:05,360 the size what is the link that we need for the program and then once all once our notes 382 00:42:05,360 --> 00:42:10,640 are sold then we wire the paying agent this is all if we were to actually issue the commercial 383 00:42:10,640 --> 00:42:16,600 paper which again is not our intent with the program but it the ability to issue the the 384 00:42:16,600 --> 00:42:21,920 notes is what allows us to use it for appropriation authority you would then wire the paying agent 385 00:42:21,920 --> 00:42:27,040 the paying agent then wires the money to the city account city of account so when the notes 386 00:42:27,040 --> 00:42:30,880 mature after this is again on this is a traditional commercial paper program I'm going to show 387 00:42:30,880 --> 00:42:35,320 a variant of this in the next couple of slides you get to the end of your you take out these 388 00:42:35,320 --> 00:42:41,680 short-term notes for whatever amount at the end of the 270 days you either roll the roll 389 00:42:41,680 --> 00:42:46,800 it over to another short-term commercial paper or you issue the long-term debt to pay that 390 00:42:46,800 --> 00:42:53,000 pay that amount off just as you would with our regular capital program and it would you 391 00:42:53,000 --> 00:43:01,640 know talk a little bit more about some other options with that as well so now I'm going 392 00:43:01,640 --> 00:43:06,000 to go into the variant which of that which is what we're proposing right now and it's 393 00:43:06,000 --> 00:43:12,440 called extendable commercial paper this is what city council approved for the bond program 394 00:43:12,440 --> 00:43:17,000 commercial paper that we mentioned earlier and a little bit different and you can see 395 00:43:17,000 --> 00:43:24,320 it here with our timeline what extendable commercial paper does is allows us to not 396 00:43:24,320 --> 00:43:33,840 have to have additional liquidity associated with with the regular commercial paper program 397 00:43:33,840 --> 00:43:40,800 so in the commercial paper program we have to have a liquidity function for the 200 if 398 00:43:40,800 --> 00:43:44,760 we're actually going to take the funds out for those 270 days in that program we would 399 00:43:44,760 --> 00:43:50,040 have to go to a bank get a letter of credit get a direct note or some other hybrid liquidity 400 00:43:50,040 --> 00:43:56,220 and pay cost so that we have someone backing us up as we go into it extendable commercial 401 00:43:56,220 --> 00:44:03,520 paper we do not have to have to have have to have that same liquidity liquidity facility 402 00:44:03,520 --> 00:44:08,800 and essentially we're backing it with our own cash flow so the way that this works is 403 00:44:08,800 --> 00:44:12,340 a little structured a little bit differently where if we were again this is all under the 404 00:44:12,340 --> 00:44:17,800 assumption that we would actually take these notes out which is not our plan but we want 405 00:44:17,800 --> 00:44:22,160 to be as transparent as possible what this program is if we're going to take it in the 406 00:44:22,160 --> 00:44:28,000 extendable commercial paper program we were to take out those notes we would have an initial 407 00:44:28,000 --> 00:44:35,840 rate for 90 days once if we had not either rolled that roll those funds over or paid 408 00:44:35,840 --> 00:44:41,160 them back with long-term debt after 90 days there would be a reset rate which would increase 409 00:44:41,160 --> 00:44:48,400 that initial rate slightly or to some extent for the remaining 180 days to hit the 270 410 00:44:48,400 --> 00:44:55,320 day period so we prefer this option in this extendable commercial paper program because 411 00:44:55,320 --> 00:44:59,760 of so we don't have that essentially we don't have to have that additional liquidity facility 412 00:44:59,760 --> 00:45:04,960 we don't have to have that letter of credit from a bank as an example to back up any of 413 00:45:04,960 --> 00:45:10,560 those funds that we take out so okay in this option after really once you hit that 90 days 414 00:45:10,560 --> 00:45:15,200 you wouldn't want to hit the reset rate so it really just shortens your time scale to 415 00:45:15,200 --> 00:45:21,760 90 days from the 270 days in a regular commercial paper program as we would approach if we were 416 00:45:21,760 --> 00:45:25,240 going to issue take off the notes as we were approached as 90 days that's when we would 417 00:45:25,240 --> 00:45:32,400 either issue long-term debt to pay them back use cash flow use it some other make or roll 418 00:45:32,400 --> 00:45:38,080 forward with another program at that time so I think once we get through a couple more 419 00:45:38,080 --> 00:45:42,280 slides we can answer any any default questions on this and again we have our financial advisors 420 00:45:42,280 --> 00:45:46,540 and bond counsel available so I know this is a lot of information that we're that we're 421 00:45:46,540 --> 00:45:56,040 putting out right now so just kind of step back what are the benefits drawbacks and considerations 422 00:45:56,040 --> 00:46:02,080 of of this external commercial paper program that we're putting forward extendable versus 423 00:46:02,080 --> 00:46:07,280 commercial paper program it's the same benefits as a commercial paper program we talked about 424 00:46:07,280 --> 00:46:11,560 earlier before cash flow for appropriation purposes but you don't have to have that additional 425 00:46:11,560 --> 00:46:17,880 cost for liquidity support we have more financial flexibility and then the program can be in 426 00:46:17,880 --> 00:46:24,720 place for up to 20 years the the drawbacks the the program itself is relatively new there 427 00:46:24,720 --> 00:46:28,360 are a number of cities that have done it we already we obviously did it earlier this year 428 00:46:28,360 --> 00:46:35,040 but there aren't the buyer base isn't that large just a few dealers that are in the market 429 00:46:35,040 --> 00:46:39,900 and you can see those listed there we've already actually already moved forward with a dealer 430 00:46:39,900 --> 00:46:48,680 on this program and the ratings the tax exemptor ratings can the rates themselves on an ECP 431 00:46:48,680 --> 00:46:54,440 on extendable commercial paper can be slightly higher than on commercial paper but you also 432 00:46:54,440 --> 00:46:59,200 don't have that additional cost for the liquidity facility so weighing those together really 433 00:46:59,200 --> 00:47:05,200 think the benefits outweigh the drawbacks there the bar market access can be access 434 00:47:05,200 --> 00:47:10,520 access can be a key credit driver free CP you know we obviously go through our ratings 435 00:47:10,520 --> 00:47:15,600 process we're already in the process of going through ratings for this program in advance 436 00:47:15,600 --> 00:47:21,480 of any action that we would take and and they need to have the comfort that we can essentially 437 00:47:21,480 --> 00:47:26,520 have the comfort that as we hit that 90 days or whatever term that we're able to go out 438 00:47:26,520 --> 00:47:31,520 to the market and and issue the long-term debt to finance which obviously is not not 439 00:47:31,520 --> 00:47:40,400 a concern right now from anyone so what is the timeline for the the utilities extendable 440 00:47:40,400 --> 00:47:45,440 commercial labor program what this month we were selecting the dealer the pay paying agent 441 00:47:45,440 --> 00:47:50,200 for the program and then sending out our draft draft documents to our working group presenting 442 00:47:50,200 --> 00:47:57,080 that was last month in November we are presenting this to the to the pub and then December ultimately 443 00:47:57,080 --> 00:48:02,880 have pub and city council approve approve the program itself so we bring this back as 444 00:48:02,880 --> 00:48:08,320 an action item for pub for recommendation for approval and then take it forward to city 445 00:48:08,320 --> 00:48:14,120 council in December and go through our rating ratings process ultimately looking to close 446 00:48:14,120 --> 00:48:22,280 on the program in January 2021. So staff does recommend to move forward with this program 447 00:48:22,280 --> 00:48:26,480 and just to kind of wrap it up with so I know there's a lot of information here with some 448 00:48:26,480 --> 00:48:33,240 of the bullet points this really a tool for us to to tie our our capital programs to cash 449 00:48:33,240 --> 00:48:38,560 flow our intent going in and I can't really see any situations especially on the utility 450 00:48:38,560 --> 00:48:44,600 side where we'd actually issue the notes really becomes a tool for us for appropriation purposes 451 00:48:44,600 --> 00:48:48,960 but the way that we're able to get the appropriation authority is by having the program in place 452 00:48:48,960 --> 00:48:54,960 so that we could access those funds on a very short timeline just one or two days if the 453 00:48:54,960 --> 00:49:00,520 need need arise so at this point I'll take the presentation down I'm here for any questions 454 00:49:00,520 --> 00:49:06,460 and we have a number of resources for questions as well and I hope this was as clear and concise 455 00:49:06,460 --> 00:49:17,720 as it could be thank you okay I have several questions I'm certainly no financial expert 456 00:49:17,720 --> 00:49:24,280 this is kind of out of my comfort zone here but I know a little bit about math and if 457 00:49:24,280 --> 00:49:29,960 I think I saw in your presentation that in order to have a hundred million dollar authority 458 00:49:29,960 --> 00:49:35,000 we would pay city of Denton would pay a five point which means five percent which is five 459 00:49:35,000 --> 00:49:44,840 million dollar premium is that true no we wouldn't pay a five million dollar premium 460 00:49:44,840 --> 00:49:53,800 but let me allow see if more of our financial advisors have any input on that question this 461 00:49:53,800 --> 00:50:01,640 is Mara Alexander with Hilltop securities there's not a premium associated with the 462 00:50:01,640 --> 00:50:06,360 program there's an upfront cost of issuance just transaction costs to set up the program 463 00:50:06,360 --> 00:50:11,640 yes and I'm not sure where the five million dollars coming from well this one of the slides 464 00:50:11,640 --> 00:50:20,040 said a three point to five point uh cost associated with the basis point okay which means what 465 00:50:20,040 --> 00:50:24,560 translate that for the lay people yeah jump so that slide is really talking about with 466 00:50:24,560 --> 00:50:28,000 the we were talking about the difference between the extendable commercial paper and commercial 467 00:50:28,000 --> 00:50:34,760 paper yes bendable commercial paper the interest rate that you're going to pay yes just slightly 468 00:50:34,760 --> 00:50:40,440 higher than the interest rate you would pay with commercial paper so um so basis point 469 00:50:40,440 --> 00:50:45,840 kind of one point oh five versus one point oh eight something like that they all on the 470 00:50:45,840 --> 00:50:54,240 interest rate that you would pay so it's just kind of that decimal point okay so ten thousand 471 00:50:54,240 --> 00:50:59,240 ten thousand to fifty thousand on one hundred million would be the difference in additional 472 00:50:59,240 --> 00:51:07,760 rate okay I see I got it one other thing I think I think I heard you say that authorizing 473 00:51:07,760 --> 00:51:16,000 this avoids the requirement for having the ability to repay the borrowed money is that 474 00:51:16,000 --> 00:51:24,740 true you you would have it doesn't avoid you know you know the one of the appealing things 475 00:51:24,740 --> 00:51:30,800 about this setup is you don't have to prove that you can repay the note is that right 476 00:51:30,800 --> 00:51:37,920 based on your revenue based on your income right so um so you do have to repay it um 477 00:51:37,920 --> 00:51:43,520 so I think I think the benefit is a little bit different in what I was trying to articulate 478 00:51:43,520 --> 00:51:48,000 was when you enter into a contract you're going to enter into a contract that's 20 million 479 00:51:48,000 --> 00:51:53,000 dollars right now we have to have 20 million dollars in the bank sitting there to say we're 480 00:51:53,000 --> 00:51:57,760 going to enter into this contract what this tool allows us to do is to enter into that 481 00:51:57,760 --> 00:52:03,480 contract without having 20 million in the bank because we have this tool that we can 482 00:52:03,480 --> 00:52:10,120 access that money very quickly so that's the difference is this tool gives us it gives 483 00:52:10,120 --> 00:52:14,880 us the appropriation authority to enter in the contract despite us not actually having 484 00:52:14,880 --> 00:52:20,920 issued the debt up front for the entirety of that 20 million so in that example say 485 00:52:20,920 --> 00:52:24,800 we're going to enter into a 20 million dollar contract but we're only going to spend 10 486 00:52:24,800 --> 00:52:30,880 million this fiscal year we would just issue 10 million this year knowing we're going to 487 00:52:30,880 --> 00:52:36,920 issue another 10 million next year to line up more closely with cash flows if that answers 488 00:52:36,920 --> 00:52:44,000 your question okay and I think I saw I forget which slide it was uh four or five big banks 489 00:52:44,000 --> 00:52:50,680 that basically would fund this activity on short notice correct well we would enter into 490 00:52:50,680 --> 00:52:55,160 the we would enter into the program with them immediately at the onset of the program and 491 00:52:55,160 --> 00:53:00,200 then they would be with us throughout um throughout the time period but yeah I really wanted to 492 00:53:00,200 --> 00:53:04,520 just point out there's only it's a just a small market right now um but what we have 493 00:53:04,520 --> 00:53:12,720 no issue um we had we had plenty of interest in the program itself so so so for us to clarify 494 00:53:12,720 --> 00:53:16,920 that so there's only I think four banks that David has identified that are actually in 495 00:53:16,920 --> 00:53:22,720 this market but if a if if the pub and the council approve this we will enter into an 496 00:53:22,720 --> 00:53:26,960 agreement with one of those banks and then and then it would be ready for us to pull 497 00:53:26,960 --> 00:53:31,040 the trigger if we need to issue it directly with that bank not with the other three would 498 00:53:31,040 --> 00:53:37,640 be with one specific bank right right and then if for some reason Denton is unable to 499 00:53:37,640 --> 00:53:46,240 pay for the uh these notes uh I think you said somewhere that you would turn around 500 00:53:46,240 --> 00:53:52,160 we could then could turn around and issue another bond to pay for the previous loan 501 00:53:52,160 --> 00:53:57,440 is that right yeah if we have I mean if we were gonna um if we ever were gonna actually 502 00:53:57,440 --> 00:54:01,520 issue the notes our intent all along would be especially with the because we'd be doing 503 00:54:01,520 --> 00:54:07,480 these large capital projects for this would be to issue long-term 20 year 30 year uh debt 504 00:54:07,480 --> 00:54:12,520 to pay that back just as we would plan for and I'll cat or any of our capital programs 505 00:54:12,520 --> 00:54:17,240 so that would definitely be there that's how we would ultimately pay back anything that 506 00:54:17,240 --> 00:54:24,480 we took out on this kind of short-term tool um this function for commercial paper yeah 507 00:54:24,480 --> 00:54:29,120 like a lot of credit right and that's really where the extended whole piece comes in is 508 00:54:29,120 --> 00:54:34,360 we're backing it ourselves instead of going out and getting a line of credit separately 509 00:54:34,360 --> 00:54:48,720 we're just saying we can back this ourselves can we go back to the timeline um used I think 510 00:54:48,720 --> 00:54:56,160 you said in December you're going to be asking for approval we are and um you know as I had 511 00:54:56,160 --> 00:55:01,920 this up I didn't and it is coming back to pb as well for um a recommendation so we'll 512 00:55:01,920 --> 00:55:08,000 have an action item for pb I don't know that we had that on this bullet point in but it 513 00:55:08,000 --> 00:55:16,400 appears as though the council's going to make a decision December 7th pub doesn't have a 514 00:55:16,400 --> 00:55:25,840 meeting until the 14th right so we go back and look at the calendar and and adjust it 515 00:55:25,840 --> 00:55:33,120 appropriately so that it comes back for sure thank you for pointing that out okay one other 516 00:55:33,120 --> 00:55:41,880 question yep the uh the slide that you showed that show the reset rate after the initial 517 00:55:41,880 --> 00:55:50,760 90 days is the reset rate determined by the loaner exclusively but yeah the market conditions 518 00:55:50,760 --> 00:55:55,560 um really drive it be right it would be in the agreement have it could go up it was we're 519 00:55:55,560 --> 00:55:59,240 not going to know exactly how much could go up after you hit that 90 days but um I think 520 00:55:59,240 --> 00:56:04,360 there was a cap on how much can go up obviously I think more and Adam could jump in and provide 521 00:56:04,360 --> 00:56:08,360 more but there's a cap on how much can go up but it can go up within a range and we wouldn't 522 00:56:08,360 --> 00:56:17,240 have any control over how much it could increase yeah it's based on an index plus a spread and 523 00:56:17,240 --> 00:56:22,680 just keep in mind that the idea is that at the end of the 90 days that if you had commercial 524 00:56:22,680 --> 00:56:25,880 paper outstanding that you would actually roll it generally which means you would issue 525 00:56:25,880 --> 00:56:30,440 a new note to pay off the old note or you would have long-term debt you know ready to 526 00:56:30,440 --> 00:56:35,160 take it out so this this penalty rate that you're asking about is sort of in the worst 527 00:56:35,160 --> 00:56:42,120 case scenario where the market's not functioning and you're forced into that extendable period 528 00:56:42,120 --> 00:56:45,800 we're at that penalty rate so that's the circumstance under which that would come into 529 00:56:45,800 --> 00:56:50,280 play and it's based off of an index plus a spread it's meant to be a penalty rate to be clear 530 00:56:50,280 --> 00:56:57,000 well russ and also to as the as david mentioned I mean our our intent would be to only use this 531 00:56:57,000 --> 00:57:02,360 for appropriation purposes so those scenarios would only happen if in fact it was actually 532 00:57:02,360 --> 00:57:07,400 issued again we just want to be clear that that we could be in a situation where we 533 00:57:07,400 --> 00:57:10,760 could issue the cp and therefore all those things would apply but ideally 534 00:57:10,760 --> 00:57:14,360 we would only use it for appropriation purposes only 535 00:57:14,360 --> 00:57:23,480 right I would just add that the commercial paper program has to look and smell like it can totally 536 00:57:23,480 --> 00:57:28,440 function and pass muster or it doesn't serve the purpose that you're the appropriation purpose 537 00:57:28,440 --> 00:57:32,280 that you're after so as you think about why are we talking about all the details of this if 538 00:57:32,280 --> 00:57:37,560 we're never going to really issue the notes it's how the program has to function in order to allow 539 00:57:37,560 --> 00:57:43,400 you to use it for appropriation authority yeah I'm surprised we haven't we didn't already have this 540 00:57:43,400 --> 00:57:49,480 I honestly didn't realize that we didn't already have this off this option and it's just an option 541 00:57:49,480 --> 00:57:56,280 too you don't have to use it it's just uh I really I see the way the budget sometimes at the end of 542 00:57:56,280 --> 00:58:01,400 the month your bills are higher than you expected and you've got to grab some money pretty quick or 543 00:58:01,400 --> 00:58:06,680 the less you've got payment problems and we don't want to have payment problems we're a payer what 544 00:58:06,680 --> 00:58:14,520 we owe yeah I think Billy that's really been more of the um um the the amount of debt that the city 545 00:58:14,520 --> 00:58:19,720 has has maintained on an annual basis um and I think as the city continues to grow and and we 546 00:58:19,720 --> 00:58:27,320 continue to see more reliance on on bonding um that this is why this is now more than ever certainly 547 00:58:27,320 --> 00:58:31,880 in the 20 years that I've been here why it makes sense today to to go ahead and have it in place 548 00:58:31,880 --> 00:58:37,880 you're right a lot of entities have have a commercial program we've made those commitments 549 00:58:37,880 --> 00:58:46,200 obviously and we need to honor them if the city I think moves forward in the future wants to consider 550 00:58:46,200 --> 00:58:52,520 changing the way we pay for improvements that's a different conversation but this is the commitment 551 00:58:52,520 --> 00:58:58,680 that we've made with these bonds we've got to make sure everything's paid so yeah I just didn't 552 00:58:58,680 --> 00:59:06,840 understand I didn't realize we didn't have a commercial program I'm taking it you're in 553 00:59:06,840 --> 00:59:12,440 support of it Billy I'm I'm in support of moving forward with this I am yes it's a good tool just 554 00:59:12,440 --> 00:59:18,520 one more tool doesn't mean we're going to issue it to just one more tool that's right I have a 555 00:59:18,520 --> 00:59:24,680 couple of questions before we move out of this um there's a lot of expertise on this phone call in 556 00:59:24,680 --> 00:59:30,920 terms of the presenter and the backers what are the potential misuses and what do we need to make 557 00:59:30,920 --> 00:59:37,880 sure we put in place at this point to avoid this extendable commercial paper from being 558 00:59:37,880 --> 00:59:40,280 misused in the future if we put it in place 559 00:59:42,680 --> 00:59:48,840 sure and I think obviously Lori could could jump in from other aspects I would just say from the 560 00:59:48,840 --> 00:59:54,360 city's purpose obviously by going through this program and being able to issue issue funds on 561 00:59:54,360 --> 00:59:59,720 such a short basis what what's incumbent on us as staff is to have a good process and procedures 562 00:59:59,720 --> 01:00:05,800 and we have we have our our debt policy which is this is addressed this program is addressed in our 563 01:00:05,800 --> 01:00:10,280 debt policy but make sure we have policy and procedures that if if we ever were in a situation 564 01:00:10,280 --> 01:00:15,640 where this was issued it was reported back to council and to pub but prior in following any 565 01:00:15,640 --> 01:00:20,120 any assurance so there's communication throughout so that's part of our internal procedures now 566 01:00:20,120 --> 01:00:26,120 but I think as we go as we update our debt policy to have that even more formal of how that process 567 01:00:26,120 --> 01:00:31,000 laid out because by going through this you know having the ability to issue funds so quickly 568 01:00:31,000 --> 01:00:37,640 we do not want to miss any any of the transparency that we have and how we issue that obviously as 569 01:00:37,640 --> 01:00:41,720 we move forward so I think that's just the biggest thing out there when you enter a program like this 570 01:00:41,720 --> 01:00:49,480 as opposed to the normal process we have with our long-term debt so this will require council 571 01:00:49,480 --> 01:00:56,600 approval prior to issuance no so once once the program notification after issuance and notification 572 01:00:56,600 --> 01:01:06,120 right yeah and then my second question is uh in terms of the current interest rates I know we've 573 01:01:06,120 --> 01:01:11,880 talked about five to eight basis points over commercial paper what are those rates running 574 01:01:11,880 --> 01:01:20,200 these days approximately here I'll ask if Laura wants to talk to the market right now 575 01:01:20,200 --> 01:01:25,880 yeah they're dependent on the term so we know 30 day piece of paper versus a 90 day piece of paper 576 01:01:25,880 --> 01:01:33,800 but I think there are probably less than 20 basis points right now so 0.2 percent okay 577 01:01:35,000 --> 01:01:40,520 that's what I expected the answer to be I just didn't know if we were talking about 20 or 40 or 60 578 01:01:40,520 --> 01:01:48,280 and we're talking about basically a quarter million dollars to put this in place 579 01:01:48,280 --> 01:01:54,920 yeah those are those are the the initial cost and we have that laid out you're right the 250,000 580 01:01:54,920 --> 01:01:58,680 but that would just be the upfront we wouldn't that wouldn't be a continual annual cost moving 581 01:01:58,680 --> 01:02:03,960 forward that's really just to stop the program up front would we have any continuing expenses 582 01:02:03,960 --> 01:02:08,760 once we put this in place there are some slight costs I believe it was I think it was it was less 583 01:02:08,760 --> 01:02:13,720 than 50,000 maybe 20 just it was just really kind of the cost to work with our work with 584 01:02:13,720 --> 01:02:17,080 bond council financial advisors because each year we do have to come back with just a parameters 585 01:02:17,080 --> 01:02:23,400 ordinance to for the extendable piece of the commercial paper program but not not significant 586 01:02:23,400 --> 01:02:32,840 cost on an annual basis okay thank you I tend to be in favor of putting the process there are the 587 01:02:33,480 --> 01:02:46,440 procedure in place okay other questions Karen your feelings um I I would just totally trust 588 01:02:46,440 --> 01:02:55,560 Billy on this one I mean he's got the most experience with money there's several of us 589 01:02:55,560 --> 01:03:02,200 here that spend too much money that's for sure yeah after after hearing the explanation I'm in 590 01:03:02,200 --> 01:03:10,680 favor of it I think would be prudent for the city of Denton to put a sign off process in place where 591 01:03:10,680 --> 01:03:20,840 at least two people in responsible positions have to look at each use of this and sign off on it 592 01:03:21,720 --> 01:03:33,240 and then make some periodic reporting to the council on what happened absolutely Ed your 593 01:03:33,240 --> 01:03:41,400 feelings yes I'm in favor of implementation and accountability as as pointed out 594 01:03:41,400 --> 01:03:51,400 transparency and accountability it's always really important yeah all right have what you need yep 595 01:03:51,400 --> 01:03:57,000 thank you very much thank you all right then we will be adjourning into a closed meeting 596 01:03:57,000 --> 01:04:02,840 and the closed meeting is a deliberation regarding certain public power utilities 597 01:04:02,840 --> 01:04:10,120 competitive matters under a Texas government code 551.086 consultation with attorneys under 598 01:04:10,120 --> 01:04:21,240 Texas government code 551.071 so um then we were just adjourned totally correct Tony because I 599 01:04:21,240 --> 01:04:25,960 was just confused all right yes ma'am we just uh just give us a couple minutes here to make sure 600 01:04:25,960 --> 01:04:31,480 that we have um anybody that needs to not be on here that's on a call to go ahead and jump off 601 01:04:31,480 --> 01:04:35,640 okay so if you want to just take a about two minute break um then we can get back together 602 01:04:36,200 --> 01:04:39,480 All right, okay.