City bond sale nets $14 million for approved project; fixed rate 4.417%

The city sold $13,805,000 in bonds through a public sale and will deliver $14,000,000 in project proceeds, city financial advisers told the City Council at the meeting.

Jason Hughes, a managing director with Hilltop Securities, said Standard & Poor's affirmed the city’s A+ credit rating and that the bonds received insurance from Assurant Guarantee, whose higher rating reduced the interest cost. "We did sell those bonds with premiums, so that premium covered all of the cost of issuance," Hughes said. "The final interest rate was 4.417%, so that is a fixed rate that does not change."

Hughes said the sale’s premium and insurance allowed the city to deliver the full $14 million that voters approved on May 3 and that the debt service came in below projections made at the time of the bond election. "We're almost $500,000 lower in debt service based on today's actual results," he said, adding the average annual debt service is about $25,000 less than projected. The debt carries a 20-year repayment schedule and a call feature that allows the city to refinance or redeem the bonds early if conditions change.

Hughes identified the winning underwriter as R.W. Baird and described market demand for municipal bonds that helped secure favorable terms: "The market has actually strengthened this week. There's been a lot of Texas bonds...and so it's been nice to see a very strong market, very good demand, for that debt."

City staff requested council approval for the bond issuance during the meeting. The transcript does not record a motion or vote on that approval.