RBC Capital Markets (presenter Dustin Trailer) briefed the Groves City Council on Nov. 24 about long-term planning and a preliminary plan of finance for upcoming capital-improvement needs. Trailer said the city’s primary revenues are ad valorem taxes, sales tax and utility revenues, and recommended the council consider increasing general-fund reserves given Groves’ hurricane exposure.

RBC’s presentation contrasted the city’s reported ending fund balance (about $4.2 million) with a target of roughly $6.5 million to reach a 180-day general-fund reserve. The adviser also recommended utility-system reserves sufficient to cover hurricane-related utility costs and discussed establishing a fixed-asset replacement fund for rolling stock. Trailer characterized the city’s current debt position as comparatively light and said the near-term financing capacity is favorable.

On debt structure, the firm recommended certificates of obligation (COs) as a likely vehicle because they can accommodate mixed-use projects (some funded from general funds and some from utility revenues) without the reserve requirements that come with straight utility revenue bonds. Trailer outlined a practical issuance timeline: council approval of a notice of intent (which sets a maximum not-to-exceed borrowing amount) followed by a 45-day publication period, then a sale and a 20–30 day Texas Attorney General review before funds would be available. He said a notice of intent in January could lead to funds in early April.

The RBC presentation explicitly referenced the meter-replacement project discussed earlier, placing it in a $5–$7 million band and recommending bundling it with wastewater and sewer collection improvements in an intermediate-term financing package to reduce issuance costs. Council asked whether grant dollars can be used to pay debt service; RBC said grant funds generally reduce the principal need (lowering the borrowed amount) rather than directly paying future debt service.

Council members asked how Groves compares to peer cities and what steps might improve the city’s interest-rate positioning. RBC said the city’s improving fund balances and existing rate adjustments position Groves for an investment-grade rating and noted options to structure debt to match the falloff of existing obligations. If the council pursues COs, staff will work with the city’s bond counsel and RBC to draft broad project descriptions for flexibility when spending the proceeds.

Next steps: staff and council to determine the scope and maximum amount for notice-of-intent and consider timing; RBC and staff will return with bond-document language and more-specific financing recommendations.