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Council approves two city borrowings: $27.175M (Series 2025A) for VBC renovations and $34M refunding (Series 2025B); estimated $3.7M NPV savings
Summary
Council approved ordinances authorizing General Obligation Warrants Series 2025A to fund renovations at the Von Braun Center and Series 2025B to refund prior debt. The city confirmed AAA ratings from Moody’s and S&P and reported net present value savings of about $3.7 million from the refunding.
Penny Smith, Huntsville director of finance, asked council to approve two borrowing ordinances: Series 2025A general‑obligation warrants to fund renovations at the Von Braun Center (VBC) and Series 2025B to refund certain outstanding city debt.
Smith said the 2025A borrowing's principal shown in the materials is $27,175,000; with premium that issuance totals about $30 million, and the city will add roughly $10 million in cash to finance a package of VBC renovation projects previously discussed. The 2025B refunding was described as a smaller competitive issuance that reaps present‑value savings.
Smith and the city's financial advisor Marcy Lewis (PFM) reported the city went to market the morning of the meeting. Lewis said the low bid for the Series 2025A competitive sale came from TD Securities with a true interest cost of 3.81 percent. The low bid on the Series 2025B refunding came from JPMorgan Chase with a true interest cost of 3.03 percent; Lewis said the refunding achieves about $3.7 million in net present value savings (about 9.9 percent of refunded principal) and roughly $500,000 per year in debt service savings from 2026 through 2035.
Smith told the council the city had earlier gone to rating agencies and received AAA ratings from Moody’s and Standard & Poor’s that underpinned the borrowings. She also told council the city plans an additional negotiated sale to complete City Hall financing (about $6.5 million more to finish a $90 million package) on Feb. 18 and said a larger issuance for school projects (about $150 million) will return later in spring or early summer.
Council action: Council obtained unanimous consent to consider the ordinance at the same meeting (a roll call recorded Kling, Robinson, Little and the council president voting aye; Councilwoman Watkins was absent). After presentation, a motion to adopt the ordinance authorizing the Series 2025A and Series 2025B warrants passed on a voice vote; the council chair moved and Dr. Robinson seconded.
Why it matters: the 2025A borrowing will fund multiple VBC renovation projects previously approved for reimbursement; the 2025B refunding reduces debt service costs through refinancing. Smith framed both sales as part of a multi‑issue financing plan already reviewed with rating agencies earlier in the budget cycle.
Ending: Finance staff said additional auctions and a negotiated sale tied to City Hall and school financing will be presented to the council in the coming weeks.
