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Cleburne authorizes up to $16 million in certificates of obligation to fund streets, public safety design and municipal renovations
Summary
Council approved issuing combination tax and revenue certificates of obligation; financial advisers said the sale preserves the current I&S tax rate and S&P affirmed an AA stable rating.
Cleburne City Council voted to authorize the issuance and sale of combination tax and revenue certificates of obligation in an aggregate principal amount not to exceed $16 million to fund street projects, design work for a future public-safety facility and municipal building renovations.
Jim Sabonis, the city’s financial adviser with Hilltop Securities, presented bid results and the final project funding plan. Bids received that day produced a true-interest cost near the levels the city had planned; the low bid was accepted and the team expects to close on the financing Aug. 20, subject to Attorney General review of bond documents.
Sabonis outlined the project funding allocation the council approved: $7.2 million for streets and road improvements, $5.4 million for architectural and design work related to a future public-safety facility, and $2.9 million for municipal facility renovations, for a total project funding need of $15.5 million. He told the council the financing structure is combination tax and revenue certificates of obligation, pledging ad valorem taxes and an unlimited pledge of surplus water and sewer system revenues as allowed for such obligations.
On credit, Sabonis reported Standard & Poor’s confirmed a AA stable rating for the city. He said the rating agency cited a growing, diversified tax base, conservative budgeting, healthy fund balances and strong financial management. Sabonis and staff told the council the plan, as presented, will require no increase to the city’s interest and sinking (I&S) property-tax rate.
Mayor Scott Kane and council members praised city staff and the finance team for the work that led to the rating confirmation and competitive bids. If the council’s ordinance is approved tonight, bond counsel will finalize the documents and submit them to the Texas Attorney General’s office for review before closing.
Council action: motion to approve 8.4 was made and seconded from the dais and was approved unanimously.
