WEBVTT 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 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 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 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 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 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 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 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 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 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 00:01:22.880 --> 00:01:31.400 is that you know with the decision to not construct that facility on that property we 00:01:31.400 --> 00:01:36.840 were required by state law to give the previous owner an opportunity to repurchase that and 00:01:36.840 --> 00:01:42.520 so we didn't want to move forward with demolishing those buildings and potentially impacting the 00:01:42.520 --> 00:01:48.400 value of that property. If after six months you know the previous owner decides not to 00:01:48.400 --> 00:01:52.360 purchase the property then we'll go ahead and move forward with rebidding that and coming 00:01:52.360 --> 00:01:56.760 back and demolishing those structures and then having discussion with the PUB and with 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 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 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. 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 00:02:33.340 --> 00:02:41.280 instrumentation and my question on C is I think this is only for fabrication of the 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. 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 00:02:57.120 --> 00:03:06.440 item C will they accept the Schweitzer electrical components? Since they're custom built to 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 00:03:13.560 --> 00:03:20.700 that in looking at this the lowest price was what was recommended $230,000 for building 00:03:20.700 --> 00:03:29.240 these steel cabinets in Mexico. The lowest price American fabrication was $7,000 more 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 00:03:38.200 --> 00:03:45.080 correct? Yes sir. In my opinion we should support American workers and the difference 00:03:45.080 --> 00:03:52.640 between $230,000 and $237,000 is three percent approximately and in the overall scheme of 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 00:03:58.320 --> 00:04:05.280 in fabricating these cabinets. So I would recommend we rethink that recommendation and 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 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 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 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 00:04:30.840 --> 00:04:39.440 a small premium to support American workers. That's that's my opinion. Thank you. And 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 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 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 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 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 00:05:09.440 --> 00:05:14.700 think we would be prohibited to award this to anyone else other than the lowest responsive 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. 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 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 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 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 00:05:41.860 --> 00:05:50.060 us look at different alternatives on how to acquire purchases and different things y'all 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 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 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 00:06:10.560 --> 00:06:16.640 Tony just suggested. Well and one quick correction that David just brought to my attention so 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 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 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 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 00:06:38.120 --> 00:06:43.040 some federal grants that do require by America but in this particular case there there's 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 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 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 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 00:07:10.920 --> 00:07:17.720 were the price total cost which was 50 percent of the evaluation project delivery was 15 00:07:17.720 --> 00:07:23.520 percent compliance with the specifications was 25 percent and then probable performance 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 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 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 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 00:07:58.840 --> 00:08:06.520 with you Karen. And I agree with Billy that that might be something council could consider. 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 00:08:15.480 --> 00:08:24.960 Billy. Yes. Okay purchasing can definitely look into that as a future requirement or 00:08:24.960 --> 00:08:36.520 a category that can score additional points for evaluation. We all say at the same time. 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 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 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 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. 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. 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. 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 00:09:39.560 --> 00:09:46.720 correct. Okay. For two. All right. Thank you. Next item is consider approval of the October 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. 00:09:56.640 --> 00:10:06.920 So moved. Thank you. And a second. Second. All in favor say aye. Aye. Motion carries. 00:10:06.920 --> 00:10:12.400 Item B. Consider recommending adoption of an ordinance city of debt in Texas authorizing 00:10:12.400 --> 00:10:16.840 the expenditure of funds for the payment of wholesale transmission charges in the total 00:10:16.840 --> 00:10:21.360 amount of seven million one hundred and eighty one thousand thirty nine dollars and seventy 00:10:21.360 --> 00:10:26.320 three cents and providing an effective date. Good morning chair. P.B. members Nick Benson 00:10:26.320 --> 00:10:41.180 assistant director of finance let me get the presentation pulled up really quick. All right. 00:10:41.180 --> 00:10:46.320 So a couple of slides to review the transmission charges for didn't municipal electric each 00:10:46.320 --> 00:10:49.560 year through the approval process we do bring this forward to the public utility board and 00:10:49.560 --> 00:10:55.400 city council. What this does is authorizes us to pay other transmission service providers 00:10:55.400 --> 00:11:00.520 for DME share of transmission assets. And says that this item is for approximately seven 00:11:00.520 --> 00:11:06.560 point two million. Listed in this chart are the entities of the service providers that 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 00:11:10.360 --> 00:11:16.040 Texas transmission of four hundred thousand. Moving down the row you can see encore NTU 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 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 00:11:27.040 --> 00:11:31.720 different categories those from zero to fifty thousand and then those fifty thousand and 00:11:31.720 --> 00:11:37.440 over. It is important to note anything between zero and fifty thousand or under fifty thousand 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 00:11:42.120 --> 00:11:47.120 for approval. Some of these you can see your wood county electric cooperative for fifteen 00:11:47.120 --> 00:11:51.200 hundred dollars for example and you see Grayson calling electric cooperative for seventy two 00:11:51.200 --> 00:11:55.960 hundred. So last fiscal year nineteen twenty we paid about twenty seven thousand seven 00:11:55.960 --> 00:12:02.080 hundred dollars in those transmission payments to entities below fifty thousand. What we 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 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 00:12:11.600 --> 00:12:16.600 of three hundred seventy thousand and you can see encore for a million eighty thousand 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 00:12:20.360 --> 00:12:24.560 bit under that seven million dollar threshold that we are seeking your approval for today 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. 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 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 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 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 00:13:12.240 --> 00:13:18.280 have that on the top of my head. I recognize Texas municipal public municipal power agency 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 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 00:13:33.760 --> 00:13:40.120 that Texas TNPA and lower Colorado are probably the only local governments if you will the 00:13:40.120 --> 00:13:48.640 other ones should be investor owned utilities. Okay. That was my only question. Okay. Yes 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 00:13:58.520 --> 00:14:06.640 had more distributed energy resources like solar its own solar or battery storage would 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 00:14:15.000 --> 00:14:26.120 and Mr. Salf hang on just a second. Thanks. Morning QB Terry Nolte assistant general manager 00:14:26.120 --> 00:14:36.120 DME. Yes the installation of small distributed generation such as rooftop solar does reduce 00:14:36.120 --> 00:14:45.780 our total transmission cost because it lowers our it's called the four coincident peak exposures. 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 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 00:15:03.440 --> 00:15:13.760 of total demand for the total ERCOT system would drop. Okay. Thanks very much. Did anybody 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 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 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 00:15:42.320 --> 00:15:47.800 corporation authorizing the city manager or his designee to execute a contract with rush 00:15:47.800 --> 00:15:53.880 truck centers of Texas LP through the buy board cooperative purchasing network contract 00:15:53.880 --> 00:16:00.040 number 601 dash 19 for the purchase of Peterbilt trucks for the various city departments providing 00:16:00.040 --> 00:16:08.240 for the expenditure funds therefore in providing effective dates in the five year not to exceed 00:16:08.240 --> 00:16:23.360 amount of 20 million dollars morning chair members of the board Terry cater fleet superintendent 00:16:23.360 --> 00:16:41.600 if the presentation pulls up here momentarily figure out how to do that. 00:16:41.600 --> 00:17:04.560 There we go. This contract is for the purchase of Peterbilt trucks through rush truck centers. 00:17:04.560 --> 00:17:09.960 Just a little background on rush truck. If you're not familiar there are the authorized 00:17:09.960 --> 00:17:13.680 distributor of new Peterbilt products for the state of Texas. They've been around since 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 00:17:20.960 --> 00:17:25.840 near service centers to us are Irving and Fort Worth. We typically use the Irving service 00:17:25.840 --> 00:17:32.800 center. We use them currently for repairs and warranty work. They also have a support 00:17:32.800 --> 00:17:37.720 center called custom vehicle solutions right here in Denton next to the Peterbilt manufacturing 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 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 00:17:49.420 --> 00:17:54.160 and a little bit about Peterbilt motors. Most of you probably know more about the history 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 00:18:01.200 --> 00:18:07.560 headquarters in in 1993. They currently have more than 1500 employees and they produce 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 00:18:13.120 --> 00:18:20.040 total production this year. A little bit about the city's Peterbilt inventory. We currently 00:18:20.040 --> 00:18:27.980 run about 125 Peterbilt trucks of various models and makes with various vocational bodies 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 00:18:34.120 --> 00:18:40.140 product. We use them in all lines of their operation from front load trucks to automated 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 00:18:48.560 --> 00:18:53.480 locations there. You can see the public works department uses a number of their trucks. 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 00:18:58.000 --> 00:19:08.160 water department and we have a few miscellaneous other applications water trucks and some specialty 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 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 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 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 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 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 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 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 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 00:20:10.280 --> 00:20:16.080 electric models. They have them under development right now. They are in limited production 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 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 00:20:30.000 --> 00:20:36.320 advantage is reduced maintenance cost and zero emissions but there are a lot of factors 00:20:36.320 --> 00:20:41.380 to consider and fleet is considering this whenever we have a truck up for replacement. 00:20:41.380 --> 00:20:47.480 Is there an application that fits the operational need of the department? How reliable is that 00:20:47.480 --> 00:20:52.480 application? Has it been tested? And of course cost is another factor. We know these trucks 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 00:20:58.900 --> 00:21:05.960 as production schedules increase the price will go down on these trucks and currently 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 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 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 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. 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 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 00:21:37.840 --> 00:21:44.320 of our applications before we just jumped in and purchased them. 00:21:44.320 --> 00:21:50.240 The benefits of the contract as with anything when you standardized you're reducing your 00:21:50.240 --> 00:21:56.260 part stocking. It's just more efficient. Training is more efficient. Diagnostic software and 00:21:56.260 --> 00:22:02.480 specialty tools and the procurement savings are reduced staff time. We get faster delivery 00:22:02.480 --> 00:22:08.080 from planning to delivery when we have a contract already in place. Current buy board contract 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 00:22:14.240 --> 00:22:23.640 applications. I'd be happy to try to answer any questions you might have. 00:22:23.640 --> 00:22:32.180 Terry I assume that the actual when it comes down to replacing each individual vehicle 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 00:22:37.800 --> 00:22:42.000 is needs to be replaced. Makes sense to be replaced. Is that right? 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 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 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 00:22:56.960 --> 00:23:01.000 and see what does it need to be replaced with. 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. 00:23:10.000 --> 00:23:14.800 I assume the bigger the truck the shorter the range. Is that right? 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 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 00:23:25.760 --> 00:23:31.960 to consume power starting to stop at a greater rate than some of the other applications. 00:23:31.960 --> 00:23:37.040 Ed I think you got your hand up. 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 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. 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 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 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 00:24:05.400 --> 00:24:10.200 truck or any other manufacturer to a hybrid drive system but we haven't really looked 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 00:24:14.960 --> 00:24:20.920 system consists of and how much it actually improves the operation of the truck. 00:24:20.920 --> 00:24:31.160 Thank you. Other questions? All right do we have a motion to approve? Move for approval. 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 00:24:41.560 --> 00:24:49.000 thank you Terry. Thank you very much. All right management reports. So management reports 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 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 00:24:59.960 --> 00:25:05.160 of the North Lake Recycling Center and also regarding outside waste haulers. So if there 00:25:05.160 --> 00:25:10.720 are any questions regarding those Brian is here and can can respond to you. Go ahead 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 00:25:20.240 --> 00:25:31.400 have curbside recycling or recycling collection sites. My question is which cities comprise 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 00:25:41.120 --> 00:25:47.080 those cities garbage to the land? I do not have that information at my fingertips right 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 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 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 00:26:08.480 --> 00:26:20.080 recycling program. Okay I'd appreciate the information thank you. Thank you. Okay if 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 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 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 00:26:39.440 --> 00:26:45.120 we're going to push that budget discussion rate discussion to to January and and that 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 00:28:10.280 --> 00:28:16.200 up unless there's any other questions on management update. Okay that brings us to concluding 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 00:28:22.120 --> 00:28:30.840 discussion or that we had earlier about the buy America. Okay yeah I agree that makes 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 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 00:28:48.360 --> 00:28:53.680 give staff direction regarding the implementation of a hundred million utility system extendable 00:28:53.680 --> 00:28:59.840 commercial paper program. Good morning everyone David Gaines assistant city manager let me 00:28:59.840 --> 00:29:12.800 pull the presentation up. So this this presentation is gonna it will discuss the possible extended 00:29:12.800 --> 00:29:18.120 commercial paper program to help man as a tool to help manage our utilities capital 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 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 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 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 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 00:29:46.360 --> 00:29:51.040 paper program really goes back to the beginning of this fiscal year or this calendar year 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 00:29:58.720 --> 00:30:03.480 obviously as you all know are the bond the bond election November approved the largest 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 00:30:10.000 --> 00:30:16.680 manage the the debt issuance and in conjunction with that program and really try to manage 00:30:16.680 --> 00:30:22.880 the tax rate implications and everything associated we we went to council and council ultimately 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 00:30:27.520 --> 00:30:35.740 intended to issue debt in accordance with cash flow as opposed to issuing debt so that 00:30:35.740 --> 00:30:41.760 we have funds available for contracts as we as we move forward with the bond program. 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 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 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 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 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 00:31:09.240 --> 00:31:15.200 debt issuance on the utility side try to avoid any rate increases sooner than necessary and 00:31:15.200 --> 00:31:20.080 match our debt issuance with our commercial paper with our capital program so as I go 00:31:20.080 --> 00:31:24.760 through the presentation that's really the backdrop to why we looked at this tool for 00:31:24.760 --> 00:31:31.880 the utility system so again there's that that background on when council initially approved 00:31:31.880 --> 00:31:38.800 in April the program from the general government side for the bond program. 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 00:31:43.760 --> 00:31:49.360 and really it comes down to the appropriation authority state law requires that before we 00:31:49.360 --> 00:31:55.440 enter into any contract we have to have the money available for that contract so without 00:31:55.440 --> 00:31:59.400 it without without this program that we're putting forward today we would have to issue 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 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 00:32:08.000 --> 00:32:15.480 balances on beyond unused funds and it could lead to accelerated rate increases so I want 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 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 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 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 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 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 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 00:32:53.380 --> 00:32:58.520 some assumptions for just for ease of example for all those contracts that we would have 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 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 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 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 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 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 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 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 00:33:45.240 --> 00:33:50.640 that we normally issue commercial paper is typically used as interim financing with the 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 00:33:57.120 --> 00:34:01.040 utility capital program you see that there in a third bullet any project that we would 00:34:01.040 --> 00:34:06.200 use commercial paper for would be authorized in our capital program through the budget 00:34:06.200 --> 00:34:11.000 annual budget process. 00:34:11.000 --> 00:34:18.360 The commercial program is revolving and that means that we can appropriate or issue the 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 00:34:25.920 --> 00:34:29.200 million hundred million dollars in the program that we're putting forward so that would be 00:34:29.200 --> 00:34:35.680 the max that we could use commercial paper for or use for appropriation purposes. 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 00:34:41.520 --> 00:34:48.200 take out a 270-day commercial paper program in the traditional sense we would have that 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 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 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 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 00:35:14.160 --> 00:35:20.440 important for how we plan on actually using the commercial paper contracts approved using 00:35:20.440 --> 00:35:25.920 appropriation authority provided by commercial paper will obligate your council to issue 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 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 00:35:41.860 --> 00:35:48.120 authority that comes with commercial paper so that we can issue long-term debt in association 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 00:35:53.240 --> 00:35:57.400 and in the next few slides that hopefully will help articulate that better and obviously 00:35:57.400 --> 00:36:04.480 can answer any questions as we move forward so what are the benefits of this commercial 00:36:04.480 --> 00:36:09.120 paper program of this short-term financing you have immediate access to funds within 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 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 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 00:36:25.360 --> 00:36:31.240 short-term interest rates of other short-term financing vehicles you avoid that negative 00:36:31.240 --> 00:36:37.360 interest carry associated with long-term bonds as those years go out and the debt issuance 00:36:37.360 --> 00:36:42.640 can more closely align with project timelines again just re-emphasizing the whole goal of 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 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 00:36:58.800 --> 00:37:04.480 current program we would have to issue the entire eighty five million dollars for the 00:37:04.480 --> 00:37:09.520 water treatment plant in FY27 despite the fact that we wouldn't spend all those funds 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 00:37:15.600 --> 00:37:21.120 that comes with commercial paper again without actually issuing the commercial paper we get 00:37:21.120 --> 00:37:27.560 the appropriation authority to line that to line up our debt issuance issuance with cash 00:37:27.560 --> 00:37:34.080 flow so in this example in FY27 instead of issuing 85 million for all those contracts 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 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 00:37:49.320 --> 00:37:57.560 issued 20 million for the cash flow expected in that fiscal year again not even issuing 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 00:38:04.240 --> 00:38:10.680 appropriation authority that comes with commercial paper so what does that look like and what 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 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 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 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 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 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 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 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 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 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 00:39:07.920 --> 00:39:13.280 our traditional issuance we would have by issuing all that 85 up front our debt service 00:39:13.280 --> 00:39:18.280 associated with that would be roughly six million dollars so we would increase in six 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 00:39:23.360 --> 00:39:28.440 29 obviously that six million would just carry forward in those future years over three years 00:39:28.440 --> 00:39:34.400 our total would increase six million dollars in debt service payments by using commercial 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 00:39:39.320 --> 00:39:44.120 the bottom table are just the increases in debt service obviously they carry forward 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 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 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 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 00:40:05.480 --> 00:40:10.880 we would have those additional payments on the last couple of years because of the way 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 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 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 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 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 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 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 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 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 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 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 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 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 00:41:45.800 --> 00:41:49.600 so what is the issuance process for commercial paper well you start with determining the 00:41:49.600 --> 00:41:53.280 cash flow needs obviously and that's going to be aligned with our commercial with our 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 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 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 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 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 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 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 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 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 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 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 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 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 00:43:06.000 --> 00:43:12.440 called extendable commercial paper this is what city council approved for the bond program 00:43:12.440 --> 00:43:17.000 commercial paper that we mentioned earlier and a little bit different and you can see 00:43:17.000 --> 00:43:24.320 it here with our timeline what extendable commercial paper does is allows us to not 00:43:24.320 --> 00:43:33.840 have to have additional liquidity associated with with the regular commercial paper program 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 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 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 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 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 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 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 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 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 00:44:22.160 --> 00:44:28.000 extendable commercial paper program we were to take out those notes we would have an initial 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 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 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 00:44:48.400 --> 00:44:55.320 day period so we prefer this option in this extendable commercial paper program because 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 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 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 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 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 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 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 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 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 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 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 00:45:56.040 --> 00:46:02.080 of of this external commercial paper program that we're putting forward extendable versus 00:46:02.080 --> 00:46:07.280 commercial paper program it's the same benefits as a commercial paper program we talked about 00:46:07.280 --> 00:46:11.560 earlier before cash flow for appropriation purposes but you don't have to have that additional 00:46:11.560 --> 00:46:17.880 cost for liquidity support we have more financial flexibility and then the program can be in 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 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 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 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 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 00:46:48.680 --> 00:46:54.440 on extendable commercial paper can be slightly higher than on commercial paper but you also 00:46:54.440 --> 00:46:59.200 don't have that additional cost for the liquidity facility so weighing those together really 00:46:59.200 --> 00:47:05.200 think the benefits outweigh the drawbacks there the bar market access can be access 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 00:47:10.520 --> 00:47:15.600 process we're already in the process of going through ratings for this program in advance 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 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 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 00:47:31.520 --> 00:47:40.400 a concern right now from anyone so what is the timeline for the the utilities extendable 00:47:40.400 --> 00:47:45.440 commercial labor program what this month we were selecting the dealer the pay paying agent 00:47:45.440 --> 00:47:50.200 for the program and then sending out our draft draft documents to our working group presenting 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 00:47:57.080 --> 00:48:02.880 have pub and city council approve approve the program itself so we bring this back as 00:48:02.880 --> 00:48:08.320 an action item for pub for recommendation for approval and then take it forward to city 00:48:08.320 --> 00:48:14.120 council in December and go through our rating ratings process ultimately looking to close 00:48:14.120 --> 00:48:22.280 on the program in January 2021. So staff does recommend to move forward with this program 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 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 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 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 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 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 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 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 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 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 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 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 00:49:35.000 --> 00:49:44.840 million dollar premium is that true no we wouldn't pay a five million dollar premium 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 00:49:53.800 --> 00:50:01.640 is Mara Alexander with Hilltop securities there's not a premium associated with the 00:50:01.640 --> 00:50:06.360 program there's an upfront cost of issuance just transaction costs to set up the program 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 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 00:50:20.040 --> 00:50:24.560 translate that for the lay people yeah jump so that slide is really talking about with 00:50:24.560 --> 00:50:28.000 the we were talking about the difference between the extendable commercial paper and commercial 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 00:50:34.760 --> 00:50:40.440 higher than the interest rate you would pay with commercial paper so um so basis point 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 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 00:50:54.240 --> 00:50:59.240 ten thousand to fifty thousand on one hundred million would be the difference in additional 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 00:51:07.760 --> 00:51:16.000 this avoids the requirement for having the ability to repay the borrowed money is that 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 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 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 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 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 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 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 00:51:57.760 --> 00:52:03.480 contract without having 20 million in the bank because we have this tool that we can 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 00:52:10.120 --> 00:52:14.880 us the appropriation authority to enter in the contract despite us not actually having 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 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 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 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 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 00:52:44.000 --> 00:52:50.680 that basically would fund this activity on short notice correct well we would enter into 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 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 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 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 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 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 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 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 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 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 00:53:46.240 --> 00:53:52.160 we could then could turn around and issue another bond to pay for the previous loan 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 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 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 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 00:54:12.520 --> 00:54:17.240 so that would definitely be there that's how we would ultimately pay back anything that 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 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 00:54:29.120 --> 00:54:34.360 we're backing it ourselves instead of going out and getting a line of credit separately 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 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 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 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 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 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 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 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 00:55:41.880 --> 00:55:50.760 90 days is the reset rate determined by the loaner exclusively but yeah the market conditions 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 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 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 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 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 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 00:56:22.680 --> 00:56:25.880 paper outstanding that you would actually roll it generally which means you would issue 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 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 00:56:35.160 --> 00:56:42.120 case scenario where the market's not functioning and you're forced into that extendable period 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 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 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 00:56:57.000 --> 00:57:02.360 for appropriation purposes so those scenarios would only happen if in fact it was actually 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 00:57:07.400 --> 00:57:10.760 could issue the cp and therefore all those things would apply but ideally 00:57:10.760 --> 00:57:14.360 we would only use it for appropriation purposes only 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 00:59:30.920 --> 00:59:37.880 sure we put in place at this point to avoid this extendable commercial paper from being 00:59:37.880 --> 00:59:40.280 misused in the future if we put it in place 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 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 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 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 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 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 01:00:15.640 --> 01:00:20.120 any assurance so there's communication throughout so that's part of our internal procedures now 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 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 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 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 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 01:00:49.480 --> 01:00:56.600 approval prior to issuance no so once once the program notification after issuance and notification 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 01:01:06.120 --> 01:01:11.880 talked about five to eight basis points over commercial paper what are those rates running 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 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 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 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 01:01:40.520 --> 01:01:48.280 and we're talking about basically a quarter million dollars to put this in place 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 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 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 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 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 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 01:02:17.080 --> 01:02:23.400 ordinance to for the extendable piece of the commercial paper program but not not significant 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 01:02:33.480 --> 01:02:46.440 procedure in place okay other questions Karen your feelings um I I would just totally trust 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 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 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 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 01:03:21.720 --> 01:03:33.240 and then make some periodic reporting to the council on what happened absolutely Ed your 01:03:33.240 --> 01:03:41.400 feelings yes I'm in favor of implementation and accountability as as pointed out 01:03:41.400 --> 01:03:51.400 transparency and accountability it's always really important yeah all right have what you need yep 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 01:03:57.000 --> 01:04:02.840 and the closed meeting is a deliberation regarding certain public power utilities 01:04:02.840 --> 01:04:10.120 competitive matters under a Texas government code 551.086 consultation with attorneys under 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 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 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 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 01:04:36.200 --> 01:04:39.480 All right, okay.