Portland approves $23 million certificates of obligation and $10.28 million refunding to fund projects, lower interest costs

Portland City Council on May 6 approved two bond ordinances to fund capital projects and refinance outstanding debt, authorizing up to $23 million in combination tax and limited-pledge revenue certificates of obligation and up to $10.28 million in general obligation refunding bonds.

City staff and the city's financial advisor told the council the transactions closed in the market May 6 and will close on May 29 if the ordinances remain in effect. Victor Quiroga of Specialized Public Finance Inc., who presented results virtually, said, “we were able to lock in a favorable interest rate today of a 4.59%” for the certificates and that the refunding reduced a higher 4.8% interest rate to about 3.82%, generating roughly $3,633,000 in interest-cost savings.

Why it matters: the certificates will deliver proceeds for projects in the city’s capital improvement program and are planned to be repaid from a mix of property tax (I&S) and utility and drainage revenues. The refunding shortens borrowing costs on earlier general obligation bonds without extending the repayment term, producing present-value savings above typical refunding thresholds.

Key facts and council discussion - Amounts authorized: up to $23,000,000 (certificates of obligation, series 2025) and up to $10,280,000 (general obligation refunding bonds, series 2025). - Debt service and allocation: City staff said $16,000,000 of the CO issuance will be supported by the city’s property tax I&S fund; the utility system and drainage fund will participate in repayment for their share of projects. - Interest rates and savings: the certificates sold at about 4.59% (lower than the budgeted 5%); the refunded principal will move from 4.8% to 3.82%, with an estimated taxpayer interest-cost savings of $3,633,000 and a present-value savings ratio of 4.75% (above the 3% threshold the advisors use). - Repayment schedule: the certificates were structured on a 25-year repayment term; the refunding keeps the original payoff schedule (illustrated as paying off as originally scheduled in 02/1938 in the advisor’s slide).

Council action and procedure - Motion to approve ordinance 2,309 (certificates of obligation) was made by Councilman Wilson and seconded by Mayor Pro Tem Green; the ordinance was approved on the council vote during the meeting. - Motion to approve ordinance 2,310 (general obligation refunding bonds) was made by Councilman Albrecht and seconded by Councilman Sutton; the ordinance was approved on the council vote during the meeting.

Who spoke: Finance staff and the city’s bond counsel were present to field technical questions; council members did not request substantive changes after the presentation.

What happens next: the presentations noted the transactions will deliver project proceeds on May 29, subject to the usual closing steps and final execution of sale and delivery documents.