Meeting_Body
FINANCE, BUDGET AND AUDIT COMMITTEE
APRIL 17, 2025
Subject
SUBJECT: PROPOSITION A AND PROPOSITION C SHORT-TERM BORROWING PROGRAMS
Action
ACTION: APPROVE RECOMMENDATIONS
Heading
RECOMMENDATION
Title
ADOPT:
A. a resolution that authorizes the Chief Executive Officer and/or other Designated Officers to renew and/or replace the existing direct-pay letter of credit ("LOC") with respect to the Proposition A ("Prop A") short-term borrowing program (Attachment A); and
B. a resolution that authorizes the Chief Executive Officer and/or other Designated Officers to renew and/or replace the existing direct purchase revolving credit facility with respect to the Proposition C ("Prop C") short-term borrowing program (Attachment B).
(REQUIRES SEPARATE, SIMPLE MAJORITY VOTE OF THE BOARD)
Issue
ISSUE
The Prop A and Prop C Short-Term Borrowing programs have proven to be flexible, cost-effective methods of short-term financing for Metro's capital program. The Prop A LOC provided by Bank of America expires in June 2025 and the Prop C Revolving Credit Facility ("RCF") with the Bank of Montreal (BMO), formerly known as Bank of the West, expires in May 2025.
Background
BACKGROUND
The Board established the Prop A short-term borrowing program in January 1991 to provide interim taxable or tax-exempt financing until grant reimbursement or other funding sources are received. Under the Proposition A short-term borrowing program, Metro is authorized to issue and have outstanding at any one time up to $350 million in Commercial Paper ("CP") notes. An LOC, which guarantees payment of the maturing CP Notes, is a required feature of the CP program.
CP is a short-term debt instrument that can be issued with maturities from 1 to 270 days. As notes mature, new notes are simultaneously issued (i.e. "rolled over"). The LOC provides guaranteed liquidity to investors when their notes mature and are a required component of the program. Additionally, the LOC prov...
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