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McAlester council hears detailed briefing on bonds, sales tax and SRF loans to address aging streets and utilities
Summary
A municipal financial adviser told the McAlester City Council that long‑running 2002 capital appreciation bonds (5.9%) are noncallable and that a one‑cent local sales tax earmarked for debt will expire Nov. 30, 2031, framing options — sales tax, ad valorem and SRF loans — for funding major water and street needs.
A municipal financial adviser gave the McAlester City Council a step‑by‑step look at financing choices for the city’s backlog of infrastructure projects and urged officials to weigh immediate borrowing against the prospect of a one‑cent sales tax freeing up when older bonds retire.
The adviser, addressing the council and public, said some 2002 capital appreciation bonds carry interest at 5.9% and are noncallable until their stated maturities in the early 2030s, so the penny of sales tax voters authorized to pay that debt will “fall off” automatically on Nov. 30, 2031, unless voters extend or replace it. He contrasted that structure with ad valorem (property tax) financing — which he described as dollar‑driven, not rate‑driven — and with sales‑tax increases, which are expressed as a percentage over a fixed period.
The presentation included concrete financing illustrations: a hypothetical $10 million general‑obligation bond issue, an example $42 million wastewater treatment project, and a cited Clean Water State Revolving Fund (SRF) loan rate of about 3.22% for a 30‑year term. The adviser said an SRF loan is a subsidized federal program administered through the Oklahoma Water Resources Board (OWRB) and will usually produce a lower interest cost than a locally issued bond or a taxable revenue issue.
“That's a federally subsidized program that the feds funnel money … to the Oklahoma Water Resources Board,” the adviser said, emphasizing the lower cost of SRF financing compared with a local bond issuance.
Council members pressed the presenter about timing, reserve mechanics and whether the city should bank the penny as debt rolls off or seek a near‑term extension or new revenue. The adviser explained that payments on bonds that mature free up money that can accumulate into reserves, and that earlier refundings (2012–2015) reduced near‑term obligations but left some older debt noncallable until the 2030s. He warned that material and construction inflation since 2020 made delaying expensive projects riskier.
The briefing did not produce a council vote; rather, members asked staff to continue modeling options, including mixes of SRF loans, limited GO‑bond issues and targeted utility‑rate adjustments, and to return with estimates for specific projects and timing implications.
What happens next: Council requested more detailed cost scenarios and prioritization data to support any future voter proposition or bond/loan package.
