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Josephine council approves $15.0 million certificates of obligation to fund water, sewer and drainage projects
Summary
The City of Josephine on Sept. 8 approved a combination tax-and-revenue certificate of obligation series 2025 to fund water, sewer and stormwater projects. Financial adviser Hilltop reported a favorable sale, a AA- rating confirmation, and an effective interest cost near 4.57 percent. The ordinance passed 4-1.
The City of Josephine on Monday adopted an ordinance authorizing the issuance and sale of combination tax-and-revenue certificates of obligation, series 2025, to fund up to $15,700,000 in water and sewer utility projects and flood-control, stormwater and drainage work.
Hilltop Series financial adviser Jim Savos, presenting the sale results, said the city competitively received five bids and secured a final par amount of $14,995,000. Savos said the city’s credit was confirmed at AA- and that the transaction was competitively priced, producing an effective interest-cost benchmark of roughly 4.57 percent and producing approximately $15,047,000 in project funds after premium and costs. “As your financial adviser, we recommend approval,” Savos told the council.
The ordinance splits the borrowing: roughly $3.79 million is structured to be repaid from the city’s interest-and-sinking (I&S) ad valorem taxes and $11.257 million from net utility revenues. City staff told the council there are no planned immediate utility-rate increases tied to the borrowing beyond normal annual adjustments, and that most of the utility-funded debt will be repaid from new connections as the city grows.
Why it matters: Council discussion focused on affordability and timing. Supporters said the low effective interest cost and the city’s growth mean the added debt can be absorbed without increasing the city’s I&S tax rate. Savos’s presentation said conservative assumptions show the city’s existing I&S rate need not rise to cover the new issuance and that the utility fund should maintain a projected cash-flow cushion of about $373,000.
Council members asked for specifics on the ordinance text, par amount and interest figures; staff and Savos said the ordinance packet contained placeholders and that bond counsel will insert the final par amount ($14,995,000), maturities and interest details before Attorney General review. Savos said the city expects to close the sale Sept. 24 after the Attorney General’s municipal bond review.
Dissent and fiscal concern: One council member warned the council that the city’s cumulative debt (described during public comment as roughly $43 million) represents a high per-resident burden and said the total obligation felt large for the community’s size. City staff replied that the debt is structured for the long term and that delays would increase future costs and slow essential projects, including wastewater treatment capacity and drainage work.
Vote and next steps: The ordinance passed on a 4-1 vote. If adopted as filed the sale documents will be submitted to the Texas Attorney General for review before closing later in September. The ordinance text will be updated with the final par amount, interest cost and the call/maturity details prior to filing.
