City staff outline debt‑service outlook, refunding opportunities and plan to free TRZ‑9 reserves

City of El Paso finance staff and municipal advisors briefed the Financial Oversight and Audit Committee on the city’s debt‑service outlook, refunding opportunities and proposals to repurpose restricted tax‑increment revenue.

Robert Cortinas, presenting for the finance office, said the presentation followed the five‑year forecast and focused on debt‑management policy limits, current debt composition, callable opportunities and planned new issuances tied to the 2019 public‑safety and 2022 community progress bonds. “One of the big things we’ve really focused on is maintaining our double‑A bond rating and minimizing borrowing cost,” Cortinas said.

Maria Urbina, managing director with Hilltop Securities, the city’s municipal advisor, described refunding options. She said the city could pursue a current refunding of a 2015 series and a tender refunding of 2016 series bonds; a March scenario produced estimated gross savings of about $7.5 million and net present value savings of roughly $5.6 million (about 4.75 percent), though she warned market volatility could alter results. “The market is not very helpful at this point,” Urbina said; she recommended parameter authorization to allow staff flexibility to price a transaction when market conditions improve.

Cortinas reviewed the city’s debt metrics and constraints in the debt‑management policy: a cap of 10 percent on total principal relative to tax‑supported debt (current 2.8 percent), a cap of 20 percent for net direct debt service as a percent of net operating revenue (current ~10 percent), and a debt‑service tax‑rate cap of $0.40 (current ~ $0.23). Outstanding obligations noted in the presentation included general‑obligation bonds (~$967 million), certificates of obligation (~$477.6 million) and revenue/special‑revenue bonds (~$59.3 million).

Cortinas proposed using debt‑service reserves to retire the remaining Tax Increment Reinvestment Zone No. 9 (TRZ 9) obligation (about $11.7 million outstanding on a CO issued for East Side Sports Complex Phase 2). He said using reserves would free approximately $4.8 million currently restricted in the TRZ 9 fund and about $2 million per year thereafter to the general fund; staff proposed keeping the PID to support facility maintenance. Cortinas said the plan is intended to help limit pressure on the debt‑service portion of the property‑tax rate as the city executes planned new issuances, including an estimated $100 million of new money next fiscal year.

Urbina and Cortinas stressed that refunding decisions are market dependent and that callable windows matter: roughly $94 million in bonds are callable in FY2025 and a larger opportunity (about $332 million) is callable in FY2026. Urbina said staff would seek parameter authorization from council (a common municipal practice) if the committee is comfortable, allowing staff to move quickly if savings emerge.

No formal action was taken; the briefing was informational. Staff said they will prepare any ordinance or parameter authorization for council if the committee and manager endorse further steps, and will present a TRZ‑9 termination ordinance for council consideration during the FY 2026 budget process.