Santa Fe Springs sells $31.8 million in bonds; city manager says funds will finance road work
Loading...
Summary
City staff delayed an April bond sale to seek better market conditions and sold $31.8 million; officials said the timing and structure likely saved the city roughly half a million dollars and will provide cash for road improvements within weeks.
Renee Bobadilla, city manager for Santa Fe Springs City, told the council the city sold $31.8 million in bonds after delaying an April 9 sale to seek a more favorable market window.
The sale will provide an immediate cash infusion for capital work: "in 2 weeks James is gonna have $30,000,000 in cash to start spending on these road improvements," Bobadilla said, referring to the public works program.
Why it matters: the timing and structure of the bond sale reduced the city’s projected interest costs, according to the city’s finance team. Julio Morales, introduced to the council as the city’s new finance director, said the financing team adjusted timing and structure to capture a better rate amid a volatile market. "We sold $31,800,000 worth of bond," Morales said. He added that delaying the sale likely avoided higher rates that would have added to long-term interest costs and that the team secured an improved call provision and structure that reduced expected interest expense.
Morales gave specific comparisons to the originally scheduled sale: the city likely avoided at least 25 basis points (about 0.25 percentage point) compared with last week’s market, which he said would have cost residents about $375,000 more in interest over the life of the issue. He also said the underwriter negotiated a nine‑year call provision rather than 10 years and that structural choices saved an additional $150,000. "I think the financing team worked hard, gave you an efficient structure, and saved you probably a half million dollars," Morales said.
City staff said Standard & Poor’s participated in prior rating discussions, and the underwriter (Cabrera Capital) provided daily market updates that informed the decision to move when pricing stabilized. Bobadilla said the council’s planned capital projects will proceed once the bond closes, and Morales said the bonds are expected to close before the end of the month and that he will begin his duties after closing.
The council did not take a vote on the financing report; the presentation was delivered as an informational staff briefing and followed by recognition of staff involved in the financing.
