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Adviser recommends $40.5 million bond package for Heath water-bridge plan; board to ask council for notice of intent
Summary
At a Finance Board meeting, Hilltop Securities advised a $40.5 million financing package for Heath’s water-bridge program, recommending a Texas 'double-barrel' pledge using utility revenues to avoid raising ad valorem taxes; the board signaled it was comfortable asking the city council to publish a notice of intent to issue up to $40 million, subject to further review of call features and phasing.
The Heath Finance Board heard a plan to finance the city’s water-bridge capital program with roughly $40.5 million in bonds, a Hilltop Securities managing director told the board.
"What we're here to talk about is funding 40,500,000.0 of funds for your water bridge plan," Jim Sabonis said, describing a structure that would combine an ad valorem pledge with net utility revenues — a so-called Texas "double barrel" pledge — to preserve Heath’s high credit rating while limiting pressure on property tax rates.
Sabonis walked the board through tradeoffs in amortization, call features and refunding. He said shortening the schedule from 25 to 20 years would reduce aggregate principal-and-interest from roughly $73 million to about $65…
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