Hitchcock council approves notice of intent for $3.5 million certificates of obligation

The Hitchcock City Council voted to authorize publication of a notice of intent to issue approximately $3,500,000 in certificates of obligation to fund specific public works projects, city financial advisor Cameron Thatcher told the council.

Thatcher, of Huntington Capital Group, said the proposed allocation included about $1,370,000 for headworks improvements and roughly $2,000,000 for the design and installation of about 11,200 linear feet of 10-inch sewer force main related to a project described in the meeting as assisting a "pig project." Thatcher described the planned financing as a 15-year loan with an optional prepayment (redemption) date allowing prepayment at no penalty and said the city intended a private placement with banks rather than a public offering to achieve a lower interest rate.

Thatcher said two local banks were already included on the distribution list and the city might hire a placement agent to broaden the list; banks would have about a month to review terms, bids were expected April 25 and he planned to return to council on April 28 to present bids and seek approval of the actual issuance. He provided an illustrative interest-rate range of about 4.25% to 4.9% and used 5.5% for conservative underwriting assumptions; he said the project's expected water-utility revenues are sufficient to service the debt at that illustrative rate.

The council moved, seconded and approved the resolution authorizing publication of the notice of intent unanimously.