Guadalupe County reviews $6M–$10M short-term financing options, requests models for larger bond scenarios

Guadalupe County Commissioners Court held a workshop in February 2025 to review preliminary financing options for near-term capital projects, including scenarios for $6 million, $8 million and $10 million in tax notes, and asked county staff and Samco Capital Markets to return with additional models for longer-term certificates of obligation and 30-year bonds.

The court discussed how the options would affect the county's interest-and-sinking (I&S) tax rate and its capacity to finance larger projects contemplated for the coming years, including a possible new jail. County officials and Samco representatives emphasized there was no immediate decision; the meeting was an informational review to shape later choices.

County Judge opened the workshop by saying the purpose was to discuss "Guadalupe County's preliminary financing alternatives with representatives from Samco Capital Markets." Commissioner (speaker 2) raised concerns about the current interest-rate environment and the county's unusually low existing debt rates, saying, "all of the debt that we have presently is at an interest rate below 1%." Duane Westerman, a Samco Capital Markets representative, reviewed three short-term scenarios and the legal tools available to the county.

Samco presented modeled tax-note structures for $6 million, $8 million and $10 million. The firm used a conservative 4% interest-rate assumption in its examples and said current market execution could be somewhat lower (Samco estimated roughly 3.5% in the near term). Samco also modeled an assumption of 5% taxable-value growth for the first two years and a later decline in growth estimates. Officials said those assumptions could be updated in April after preliminary values from the appraisal district are available.

Under the tax-note scenarios discussed, Samco illustrated limited near-term impact on the county's I&S rate; presenters described the county's current I&S portion as "just over a penny." Samco noted the tax-note structure would require payoff within seven years, which the firm and commissioners described as a trade-off that avoids a bond election. As Westerman said, "tax notes ... you have to pay it off within 7 years." The firm also explained that call features to permit early repayment can be structured, sometimes at a modest yield trade-off.

Court members reviewed other financing options. Samco summarized that certificates of obligation require a published notice of intent and a waiting period in which registered voters may file a petition; if a petition reaches the 5% threshold (based on turnout in the last gubernatorial election), the county must hold a bond election. A full bond election would instead place propositions before voters and could allow a longer amortization, typically up to 40 years under current practice, with a corresponding increase in effective long-term borrowing costs.

Commissioners also discussed planning for a potential large capital authorization, using a hypothetical $150 million jail as an example. Samco explained that voter authorization does not require selling all bonds at once and that issuances can be staged to match construction and reduce arbitrage risk. On arbitrage, Samco warned the group that earnings on unspent bond proceeds can trigger federal remittance obligations if investment earnings exceed the yield on the bonds, and that careful project timing and spending schedules reduce that risk.

No formal vote or ordinance was taken at the workshop. The court directed staff and Samco to prepare additional models, including certificates-of-obligation structures and a 30-year bond scenario, and to return with updated scenarios after preliminary appraisal-district values are available. Commissioner (speaker 2) asked for another session "maybe in the next 45 days" to review expanded scenarios; Samco agreed to build the requested models.

With no formal action taken, the court closed the workshop after the informational discussion and scheduled further modeling and follow-up in coming weeks.