Boerne to issue $4 million in general obligation bonds to fund Northside Park construction

The Boerne City Council voted Sept. 9 to authorize the issuance of the City of Boerne general obligation bond series 2025 to fund construction of Northside Park.

City staff said the city received competitive bids for a $4 million general obligation bond offering. "What we're issuing today is $3,995,000 of general obligation bonds," said Jim Sabonis, managing director with Hilltop Securities, the city's financial adviser. Sabonis said the sale generated a premium that will cover issuance costs and allow a $4,000,000 deposit to the construction fund at closing.

Sabonis told the council the bonds carry a 20-year amortization with a standard 10-year call and that the low bid came from BOK Financial Securities. He described a favorable credit environment for the city and noted a Moody's Investors Service rating upgrade to Aa1. Sabonis said the all-in true interest cost for the transaction was about 5.25% and that total principal and interest payments would be roughly $5.4 million; he added the sale produced interest-cost savings compared with earlier projections.

The council heard details about the city's credit profile and rating methodology and how factors such as conservative budget management, low leverage and a diversifying tax base supported a strong rating. Sabonis said those strengths attracted several strong bidders and produced a favorable outcome for taxpayers: "That reduction in interest rate resulted in a reduction of proposed interest of $308,000 which is 22 percent less than the interest cost we had on the original plan," he said.

Council voted 5-0 to adopt the ordinance authorizing the issuance of the bonds. Councilor Macaluso moved the ordinance; Councilman Bateman seconded the motion. Staff and bond counsel will execute final documents and submit them to the Texas Attorney General's office for review; Sabonis said the team expects to close the sale after AG approval, targeting Sept. 25.

Why it matters: The bond proceeds will be used for the Northside Park project; the financing outcome affects the cost to the city and taxpayers and the timing of construction funding.

The council also approved a one-time reading of an ordinance to accept bids for debt issuance earlier in the meeting to accommodate the time-sensitive nature of competitive bids. That one-time reading was approved under the city charter and preceded the ordinance authorizing bonds.