Title
Proposed Amendment to Debt Management Policy
Body
Agenda of: November 21, 2024
Item No.: 2024-356
Amount: NA
TO: The Honorable
Board of Directors
Great Lakes Water Authority
FROM: Suzanne R. Coffey, P.E.
Chief Executive Officer
Great Lakes Water Authority
DATE: November 21, 2024
RE: Proposed Amendment to Debt Management Policy
MOTION
Upon recommendation of Nicolette N. Bateson, Chief Financial Officer & Treasurer, the Board of Directors (Board) of the Great Lakes Water Authority (GLWA), approves the Proposed Amendments to the Debt Management Policy with an immediate effective date and authorizes the Chief Executive Officer to take such other action as may be necessary to accomplish the intent of this vote.
BACKGROUND
The Authority’s Debt Management Policy was adopted by the GLWA Board on December 9, 2015 and amended on April 26, 2023. The goal of the policy is to ensure that financings undertaken by GLWA satisfy clear objective standards which allow it to protect its financial resources, meet its long-term capital needs, and comply with the provisions of the Master Bond Ordinance. The policy provides guidance on the types and structures of debt instruments and the methods of sales to be considered. In addition to addressing the sale of debt, the policy demonstrates the Authority’s goal to provide debt management activities such as timely continuing disclosure filings and rating agency communications that will help the Authority maintain and improve its credit ratings to reduce the future cost of capital. The policy also describes the selection process of underwriters and management of the syndicate.
JUSTIFICATION
Consistent with prior Board communications, the GLWA intends to conduct a Request for Proposal (RFP) process for bond underwriting services in the coming months. The Public Finance team identified and drafted proposed amendments to the Debt Management Policy to assist in managing the expectations of market participants. The proposed amendments clarify and document the cadence of the underwriter selection process.
A red-lined version of the GLWA Debt Management Policy with proposed changes follows this Board Letter. The proposed changes are focused on Section 13 related to Underwriter Selection and Syndicate Management. The most significant change is the addition of sub-section 13.1 to outline the process and cadence of underwriting syndicate selection as follows.
“For long term debt not issued through a State or Federal program such as the State Revolving Fund program, GLWA will appoint a syndicate of Underwriters (the “Underwriting Syndicate”) through a competitive procurement process as outlined in GLWA’s Procurement Policy. The Underwriting Syndicate will provide bond underwriting services for all negotiated transactions that take place during a three-year term, but the initial term may be extended by the Board as appropriate to maintain ongoing coverage. Exceptions to the use of the Underwriting Syndicate shall be reported to the Board in advance of any transaction.”
Additional edits to sub-sections 13.2 Senior Manager Selection, 13.3 Co-Senior Manager Selection, and 13.4 Co-Manager Selection further integrate the role of the underwriting syndicate.
BUDGET IMPACT
There is no budget impact resulting from the amendment to the debt policy.
COMMITTEE REVIEW
This matter was reviewed by the GLWA Audit Committee at its meeting on October 25, 2024. The Audit Committee unanimously recommended the Board of Directors approve the proposed amendments to the Debt Management Policy with the addition of the phrase “in advance of any transaction” at the end of sub-section 13.1.