Maverick County reviews plan to restructure 2020 bonds to avoid sharp 2030 tax spike

Maverick County commissioners on Aug. 15 heard a presentation from David Gonzalez of PfM Financial Advisors on a proposal to restructure certificates of obligation issued in 2020 to avoid a large bullet payment and a consequent jump in the county's interest-and-sinking (I&S) tax rate in fiscal 2030.

Gonzalez told the court a bank is willing to refinance the outstanding 2020 maturity for a 20-year term at a fixed interest rate of 4.79 percent, which would spread the county's payment obligation and prevent the modeled increase in the I&S rate of roughly seven cents that would otherwise arrive in 2030.

The plan is a restructuring, not a rate-refinancing for net present-value savings, Gonzalez said: "We're not locking in the lower interest rate. We're just spreading out the debt." He said that stretching the maturity will increase total interest paid over the life of the debt while avoiding the single-year spike in 2030.

Why it matters: the county currently faces a large bullet payment coming due on the 2020 certificates. Gonzalez's slides showed the county's debt-service profile jumping from about $2.7 million in one year to roughly $6.0 million the next if the 2030 maturity remains as structured. Under the bank proposal, that single-year payment would fall to roughly $302,000 in the modeled refunded schedule and the annual I&S levy would be smoothed.

Court discussion and next steps: Judge Canto and commissioners questioned how the original 2020 obligation was spent. The judge said preliminary county office records indicate some of the 2020 proceeds were used for the county amphitheater; the court asked staff to confirm exact project use. Because the presentation was informational, the court took no binding vote on the financing on Aug. 15; Gonzalez said staff and bond counsel would return with final documents for a vote at a scheduled Aug. 27 meeting and, if approved, the loan would close on Sept. 24.

The court and staff emphasized two trade-offs: (1) the bank option avoids open-market issuance costs (ratings, underwriter fees and related counsel) and (2) lengthening the maturity reduces near-term tax pressure but increases long-term interest expense.

The court made no formal financing commitment on Aug. 15; commissioners agreed to place the item on the Aug. 27 agenda for action.

Ending: County staff will provide written backup showing the original purpose of the 2020 certificates and final loan documents before the Aug. 27 vote; commissioners asked the auditor and budget office to confirm the prior expenditures and the final projected tax-rate impact before any approval.