Fate City Council approves $20 million general obligation bond for public safety; lower-than-budgeted interest rate reduces tax impact

The Fate City Council on Feb. 3 approved Ordinance 2025-005 to issue $20,000,000 in general obligation bonds to finance public safety projects, voting 7-0 to adopt the measure.

The bond sale was competitively priced the morning of Feb. 3; Andre Iel, financial advisor with Hilltop Securities, told the council the winning bid came from BofA Securities with a true interest cost of 3.7858%. "We priced those bonds this morning via a competitive sale," Iel said, describing the process and the 12 bids the city received.

The bond will finance $20 million in public safety projects and sold at a premium, producing final bond proceeds of approximately $18,830,000. Iel said the premium lowered the effective borrowing cost and reduced the budgeted tax-rate impact. "The interest rate that was budgeted back in the summertime was 5% and we're going to end up at 3.79%," he said, adding the average annual debt service is now projected at about $1,460,000 versus a budgeted $1,611,000.

City staff and council members discussed project timing and next steps after the sale. Council members asked about the callable feature and refinancing options; Iel said the bonds are callable beginning in 2034 and that the city would evaluate refinancing only if present-value debt-service savings met typical thresholds (he referenced the Government Finance Officers Association guideline of roughly 3% present value savings). "We would run the numbers and give you a debt service savings schedule per year," Iel said.

City staff described anticipated project sequencing once funds are wired after closing. Staff said the city will first order a ladder fire truck (estimated cost about $2,300,000), add other apparatus already in procurement, and proceed with design and construction of a new combined police and administration facility. City staff reported they received 17 architect qualification statements and expect to shortlist and select an architect at a March 3 meeting, then start design (estimated six to nine months) before bidding and construction. Staff estimated construction could take about a year once started, with full occupancy and related renovations pushing some results into a multi-year timeframe.

Iel and staff also presented tax-impact estimates using 2024 certified values: with the lower interest cost, the tax-rate impact fell from an originally budgeted 4.79 cents to about 3.93 cents. Using the city's 2024 average home value projection of $370,247, Iel said the estimated annual tax increase tied to the bond would be about $145.71 per homestead (about $12.14 per month), down from $160.67 under the earlier budget assumption.

The ordinance authorizes issuance of the bonds, directs bond counsel to submit documents for review by the Texas Attorney General's office, and sets the schedule toward a planned closing Feb. 27, when proceeds would be wired for project use. Council voted 7-0 to approve the ordinance.

Council asked staff to provide a detailed project plan and a personnel forecast tied to the new facilities. Staff agreed to return with a more detailed timeline, procurement list and project milestones at a future meeting.