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Council accepts favorable bid; Port Arthur to issue up to $18M in certificates of obligation
Summary
After a rating review and bond-market update, the council approved the sale of combination tax and revenue certificates of obligation not to exceed $18 million, with the bid reflecting a par amount of $17,675,000 and an effective interest rate around 4.63%.
City financial advisors presented the results of a negotiated bond sale before council on July 29 and recommended awarding the certificates of obligation. Ann Berger Entrekin of Hilltop Securities summarized investor interest, the Standard & Poor’s rating outcome and how premium proceeds enable the city to deposit the full $18,000,000 into the project fund.
"Congratulations the city you kept your same rating an A plus with a stable outlook," Ann Berger Entrekin told council, noting the rating agency observed "stronger than budgeted revenue growth," a strong fund balance and the city’s long-term capital planning. The bid presented to council showed a par amount of $17,675,000 with premium bringing total sources to $18,333,000 and a winning interest rate of approximately 4.63%.
Council discussion centered on how the proceeds will be assigned. Council members asked for an itemized allocation by category so members could track project spending; staff said a draft project allocation exists and will be provided to council before the end of the meeting and will be finalized during the budget process. Assistant city management staff and the finance director said the certificates will fund capital projects including street, building and park improvements and site acquisition; staff emphasized final allocations can be adjusted when the council adopts the capital budget.
The motion to award the sale passed by majority vote (voice vote). Staff next steps are to finalize the purchase agreement, complete closing, deposit the project fund and present a detailed project allocation schedule to council for tracking.
