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Oklahoma City Water Utilities Trust approves up to $175 million bank note to bridge capital needs
Summary
The Trust approved a resolution authorizing up to $175,000,000 in short‑term bank financing to bridge capital needs over the next 18–24 months; PFM adviser Dennis Whaley said Bank of Oklahoma offered the most cost‑effective bank‑note proposal and the transaction is expected to close Nov. 18.
At its Nov. 4 meeting, the Oklahoma City Water Utilities Trust approved a resolution authorizing issuance of short‑term obligations in an amount not to exceed $175,000,000 to support the utility’s five‑year capital program.
Dennis Whaley of PFM, the Trust’s financial adviser, presented the transaction as the final step in the utility’s financing plan to bridge funding needs for the next 18–24 months. Whaley said the utility earlier increased its commercial paper (CP) program from $350,000,000 to $500,000,000, restored CP capacity through an Oct. 23 refunding and raised $150,000,000 of new money along with $50,000,000 available in CP.
Whaley said staff issued an RFP for the bank‑note facility, received two responses and selected Bank of Oklahoma for a $175,000,000 program. “It was the most cost effective. It had the lowest borrowing costs, low lowest fees,” Whaley said. He told trustees the bank‑note closing is planned for Nov. 18.
Whaley also gave a brief market update, noting the Federal Reserve lowered the fed‑funds rate by 25 basis points in September and again in late October and that rate‑movement and a partial federal shutdown have increased uncertainty in the economic data. He said the utility continues to see longer‑term rates moving slightly higher while shorter rates have moved lower.
During trustee questioning, a trustee asked whether the $175,000,000 bank‑note borrowing was within the approved five‑year capital plan and whether coverage ratios would remain adequate. A finance staff member answered that the bank note was anticipated in the five‑ and ten‑year forecasts, would supplement the CP program as short‑term financing and that third‑tier parity debt coverage was at about 1.63. The staff member said the utility meets its coverage metrics and policies with this financing and with the CP program.
Speaker 1 called for a motion to approve resolution item 6(a); the motion passed. The transcript records approval but does not specify the mover, seconder or vote tally.
Next steps: staff expects to close the bank‑note transaction Nov. 18 and to continue implementing the capital program. No further details on final contract terms or the vote tally were recorded in the transcript.
