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Garden City approves $7.795 million bond issue, citing lower borrowing costs and Aa3 rating
Summary
The City Commission approved a general obligation bond ordinance and resolution to issue bonds funding water and wastewater projects. Financial adviser Brett Shrogan said competitive bids produced a 3.70% true interest cost and allowed the city to downsize the issue while saving roughly $735,000 over the life of the bonds.
The Garden City City Commission on Oct. 15 adopted an ordinance and accompanying resolution authorizing issuance of the city's 2024 general obligation bonds to fund a water storage tower, well engineering and redrilling, and an extraneous flow basin at the wastewater treatment plant.
Financial adviser Brett Shrogan of Stifel Public Finance told commissioners the city received seven competitive bids when the sale opened that morning; Moody's Investors Service reaffirmed Garden City's Aa3 underlying rating. "The sale resulted in a true interest cost of 3.7%," Shrogan said, adding that the underwriter-paid premium of roughly $215,000 allowed the city to reduce the par amount from $8,005,000 to $7,795,000 while still funding the projects and paying costs.
Shrogan said the lower-than-projected interest rate will reduce annual debt service, estimating average payments of about $572,813 per year compared with earlier staff projections near $608,000. "That results in a savings to the city of over $735,000 over the life of the bonds," he said.
City bond counsel Mary Carson (on the phone) and staff outlined next steps: print the bonds, submit the transcript to the attorney general, and close the issue on Nov. 13, 2024. Staff also said the bonds are callable and that staff will monitor market conditions for possible refinancing opportunities in February or later if rates drop.
Commissioners moved and approved the ordinance and the resolution by voice vote; no roll-call tally was recorded in the meeting transcript.
Why it matters: The sale locks funding for several utility capital projects while trimming projected annual debt service in the near term. Staff cautioned that switching accounting or other structural changes in future years can affect debt ratings; Shrogan said Moody's scorecard is only one factor in ratings but reaffirmed that Garden City's financial profile and reserves supported the Aa3 rating.
Next steps: The city will finalize closing documents and proceed to close the issue in mid-November as scheduled.
