Richardson council approves sale of 2025 general obligation bonds and certificates of obligation; ratings affirmed

The Richardson City Council voted Thursday to approve matters incident to the sale of the city’s 2025 debt issues, including a $61.31 million general obligation (G.O.) bond series and two certificate of obligation issues, one tax-exempt and one taxable for golf-course improvements.

George Willeford of Hilltop Securities reported on the negotiated sale. He told council the deals performed well in the market: Moody’s and Standard & Poor’s affirmed the city’s AAA ratings, and underwriters were able to secure substantial investor interest. Willeford said the G.O. bonds had a par amount of $61,310,000 and would generate roughly $63,670,000 of project funds, because of premiums achieved in the sale; the effective true interest cost for the G.O. bonds was 4.14%.

Willeford said the city’s tax-exempt certificate of obligation had a par amount of about $20,575,000 and would produce roughly $21,735,000 of project proceeds, with a true interest cost near 4.20%. The smaller taxable certificate of obligation—identified in the presentation as approximately $6,095,000—was described as financing golf-course improvements and carried an effective rate of about 5.47%; Willeford noted the taxable rate compares favorably with current mortgage rates.

Bob Dransfield of Norton Rose Fulbright, the city’s bond counsel, told council that closing was expected about a month after the sale (the presentation cited a late-May target). Staff asked council to approve ordinances and other matters incident to each sale. Council moved, seconded and approved ordinances authorizing the issuance and sale of the three financings; City staff identified Stifel, Nicolaus; Raymond James; and BOK as underwriting managers for the negotiated sales.

Why it matters: Council said the affirmed high ratings and competitive pricing preserve the city’s capacity to finance capital improvements at a lower cost. Presenters credited Richardson’s tax base, conservative financial management and reserve position as reasons rating agencies maintained the top ratings.

What the council approved: Motions and ordinances were adopted for (a) City of Richardson, Texas general obligation bond series 2025, (b) combination tax and revenue certificates of obligation series 2025A, and (c) combination tax and revenue certificates of obligation taxable series 2025B (golf course improvements). Staff and bond counsel said proceeds would be delivered at closing in late May and project funds would be available thereafter.