McLennan County OKs publication notice for up to $30 million certificates of obligation

McLennan County commissioners voted to publish a notice of intent to issue certificates of obligation for an amount not to exceed $30,000,000, setting a tentative sale date of July 15, the county's bond counsel and finance staff told the court.

The notice gives residents formal public notice that the county intends to borrow for long-term capital improvements and sets the schedule for publication and the sale process; County financial adviser Mark McClainy said, "This is not selling the obligations today. ... on July 15, we will be here and we'll be receiving or getting interest rates from prospective bidders or buyers of the bonds." The court approved a resolution authorizing the publication of that notice.

The notice must be published in the county's legal paper at least 46 days before the sale and posted on the county website, McClainy said. He told commissioners the legal publication and the website posting are steps to comply with the Certificates of Obligation Act and to give citizens a chance to review the proposal. McClainy also advised that the court may postpone the sale if market conditions are unfavorable: "Yes, it can be postponed if rates do not look favorable," he said, citing past examples when sales were delayed because interest rates spiked.

County staff and bond counsel explained that the court is not legally obligated to issue debt today; the sale and formal indebtedness decision would occur only if commissioners accept bids on the sale date. Commissioners discussed likely interest-rate ranges and the need to retain flexibility to protect the county's tax rate and debt service assumptions. McClainy said recent market movements had pushed municipal rates slightly higher but projected the county would likely be under 4.5 percent in typical scenarios; he recommended retaining discretion to delay if rates rose materially before the sale.

The court voted to approve the resolution authorizing publication of the notice of intention to issue certificates of obligation, setting the sale calendar and preserving the option to postpone the sale if needed.

The sale, if held, will create new debt service obligations that will be reflected in next fiscal year tax-rate calculations; county staff said they have included an estimate of the potential debt-service impact in preliminary tax-rate scenarios presented to the court earlier in the meeting.

Next steps: publish the two required legal notices, post the resolution on the county website, and return to court on the scheduled sale date to accept bids or to postpone the sale if market conditions have deteriorated.