The City Council approved the sale of $4.2 million in bonds to fund water and sewer capital projects included in the City’s capital improvement program budget at the June 19 City Council meeting.
Bond proceeds will be used for water quality improvements (tank mixers), storage tank upgrades and security, sewer line protection program, water system capacity improvements, and fire protection initiatives.
“These projects are essential for the integrity of our utility systems,” said Chief Financial Officer Sharen Jackson. “But it’s important to note that no property taxes are being used to pay for the bond funds needed to complete them.”
The bonds will be repaid with water and sewer fees collected on the consumption of the services and fees paid on development projects.
“The bonds were sold competitively and we received six bids,” Jackson noted. “We conservatively expected an interest rate of 3.7%, so we were pleased with a low bid of 3.14%.”
The City’s Financial Adviser, Jim Sabonis, explained that the favorable bid reflects the City’s AAA rating, which was confirmed as part of the bidding process, and general creditworthiness.
“When you look at a national index of AAA cities and compare sales for the same day, you’ll note that the national index was about 3.4%. Of course markets move, but Southlake’s lower interest rate compared to rates received by peer cities reflects its credit quality and the tremendous demand for the City’s debt by retailers,” said Sabonis.
Through the City’s use of cash and aggressive amortization schedules when debt is issued, the City has reduced the property tax supported debt per capita from $3,506 in 2010 to $1,682 in 2018, a 52% reduction in that period.
The financial news is good for the City of Southlake. The most recent bond re-financing will save the City more than $3.3 million in debt payments. The refinanced debt is the outstanding 2005 SPDC and GO Refunding Bonds. The Southlake City Council is expected to approve the refinancing at the May 6, 2014 City Council meeting.
“The City was able to save millions of dollars by using our AAA bond rating from Fitch and Standard & Poors,” said Chief Financial Officer Sharen Jackson. “It is to the City’s advantage to use this rating to receive a lower interest rate on the re-financing.”
2014 Bond Sale
The City also received good news about its latest bond sale. Funding for road, water and sewer improvements will be borrowed at a 2.6% interest rate. Robert W. Baird is the provider for the Series 2014 Certificates of Obligation.
The monies will be put to work on many Southlake projects including: the Southlake portion of the FM 1938 widening project, the North Kimball widening project and the White Chapel Boulevard improvements.