Pasco staff introduce ordinance to refinance 2015 water and sewer bonds, citing potential $850,000 savings

Interim Finance Director (presentation referred to in transcript as Director Garcia) told the council that staff plans to introduce an ordinance authorizing the refinancing of water and sewer revenue bonds issued in December 2015.

Garcia said the earliest call date for the outstanding bonds is December 2025 and staff and the city's financial advisors have monitored market conditions. Based on recent review, staff said refinancing approximately $10.6 million of the existing debt could yield about $850,000 in savings driven by lower interest rates and the release of roughly $750,000 of restricted funds that currently serve as backup savings under the bond covenant.

Garcia described proposed parameters for the ordinance: the replacement bond issue would not exceed $11,000,000, the interest rate would not exceed 5.5% and the deal should yield at least 3% present-value savings. He told the council staff will continue to evaluate market conditions and can cancel the issuance if conditions are unfavorable.

Council members asked how certain the savings estimate is; Garcia said the estimate has changed as market conditions moved and staff will monitor yields closely up to market sale date.

What happens next: staff will place the ordinance on a future agenda (next week was mentioned in the workshop) to authorize the bond issuance process and finalize the sale in December if market conditions remain favorable.