Brownsville authorizes staff to seek up to $150 million in certificates of obligation to fund public-safety facility, roads and airport work

Brownsville — The Brownsville City Commission voted to authorize staff to proceed with the sale of up to $150 million in certificates of obligation, a move staff and the city's financial advisor said would front-load capital funding for a public-safety facility, street projects, park improvements and airport work.

City staff presented a delegation ordinance and supporting financial analysis prepared with Estrada Hinojosa. Dave Gordon, the city's financial advisor, summarized the city's debt profile and two pro-forma scenarios: a $150 million sale and a smaller $50 million issuance. Gordon said the city currently has roughly $233 million outstanding with about $159 million callable; in the $150 million scenario the expected par amount would be about $143 million because of expected premium, with assumed interest rates near 4.5 percent in the advisor's worksheet.

Deputy City Manager/CFO Alan Gard said the larger, front-loaded issuance is recommended in part because pending state legislation could limit the city's future ability to issue capital debt in larger annual amounts. "If we were limited to $15,000,000 a year, it would take us six years to build that building," Gard said, referring to the proposed public-safety facility he estimated would cost between $70 million and $80 million including contingency. He said the package also includes an emergency operations center and cybersecurity investments.

Gordon described how the proposed structure would work to hold the debt-service tax-rate portion near the current plan (the staff presentation showed a debt-service rate component of 0.247978). He noted the proposal assumes some internal contributions (approximately $2 million) and projected interest earnings on project funds to temper next-year debt service. The advisor's presentation showed a conservative scenario that could add as much as roughly two cents to the tax rate in 2027'28 under the assumptions in the worksheet, though Gordon said the final tax-rate impact could be lower depending on assessed-value growth and final sale pricing.

Commissioners asked about total costs, contingencies and the timing of a sale. Staff said the sale was scheduled to be marketed in late September with a proposed closing in October if the commission approved the delegation ordinance; bond-rating agencies affirmed the city's ratings during the process. Gard and the advisor also told commissioners the approach preserves the city's ability to deliver priority projects now rather than stagger them for multiple smaller issuances.

After public hearing, the commission authorized staff to proceed with the sale and delegated final sale terms to designated city officials and advisers. The motion to authorize up to $150 million passed following a second; the commission recorded the approval and directed staff to complete the sale timetable and related disclosures.

Key details from staff and adviser presentations - Purpose: fund public-safety facility (police and fire), streets (including Coffeeport Road, Old Alice Road, 14th Street), parks and airport improvements, IT/cybersecurity and other capital needs. - Estimated public-safety facility cost: $70'$80 million (including contingencies and furnishings, per staff). The presentation stated contingencies were included in estimates. - Debt structure: estimated par approximately $143 million (due to expected premium) with a projected interest assumption around 4.5 percent in the pro-forma. Staff showed how interest earnings and landfill transfers could offset part of next-year debt service. - Timing: delegation ordinance passed to allow marketing the sale on Sept. 23 with closing around Oct. 21 (dates presented by adviser).

Action: Delegation ordinance approved to permit issuance and sale of up to $150,000,000 in combination tax and revenue certificates of obligation; staff and advisers will finalize terms within the delegated authority.

Votes at a glance - Delegation ordinance authorizing issuance and sale of up to $150,000,000 certificates of obligation: approved (motion carried in open session).