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Memphis council authorizes sending $150 million bond and commercial paper resolutions to public notice
Summary
The Budget & Audit Committee approved resolutions to authorize up to $150 million in commercial paper issuance and related general-obligation bonds to refinance commercial paper and provide capital for public works projects; the presentation outlined estimated debt service and key dates for rating and sale.
The Budget & Audit Committee advanced two related finance resolutions authorizing the City of Memphis to issue up to $150 million in commercial paper and a corresponding authorization to issue up to $150 million in general-obligation improvement bonds to refinance outstanding commercial paper and fund capital projects.
Andre Walker, the city’s chief financial officer, explained the city’s three-step commercial-paper pipeline: seek authorization to issue commercial paper, issue commercial paper in increments as projects progress, then issue long-term bonds to pay off outstanding commercial paper. Walker estimated proceeds would total about $150.876 million, with an estimated true interest cost around 4.04% and an average bond life of approximately 11 years. Preliminary timing called for rating presentations in late October, pricing in mid-November, and closing in December with a final report to council in January.
Walker said the proceeds would be used to support the city’s annual CIP program and listed examples including stormwater bonds and an EPA loan. Council members asked for lay-language explanations about why the city uses commercial paper as a lower-cost, short-term bridge before converting to long-term bonds; Walker explained that commercial paper typically carries lower short-term rates than long-term bonds and can reduce financing costs when managed prudently.
The committee voted in favor and advanced the matters for full council consideration; Walker said staff will return with timing and final results after bond pricing and rating presentations.
