Gonzales council OKs amendment to 2024 lease revenue bonds to align with delayed USDA loan
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Summary
The council unanimously adopted two resolutions to amend the indenture for the Gonzales Public Financing Authority Lease Revenue Bonds Series 2024A, extending redemption dates to June 1, 2027, to accommodate a delayed USDA loan closing and absorbing estimated additional costs.
Gonzales Mayor Jose Abios and the City Council voted to adopt two resolutions authorizing amendments to the indenture for the Gonzales Public Financing Authority Lease Revenue Bonds Series 2024A, extending mandatory and optional redemption dates to align with a postponed U.S. Department of Agriculture loan closing.
City finance staff told the council the USDA will not be able to review and approve all project expenditures by the original May 1, 2026 mandatory redemption date. To avoid a funding gap, staff proposed a first amendment to the 2024 bond indenture to move the mandatory redemption date to June 1, 2027, and to delay the optional redemption date by one year.
"USDA is expected to have reviewed all the expenditures with respect to the project by 06/01/2027, allowing us to close the loan then," a finance staff member said during the presentation.
Staff warned the change carries costs. The city will incur roughly $80,000 in financial-services and bond-counsel fees; will repay approximately $845,000 to some current bondholders who could not or would not extend their holdings; and expects to pay about $266,000 in additional interest because debt service will extend until the USDA loan closes.
Mike (finance advisor) summarized the net effect: the new bond issuance would be reduced by the $845,000 repayment and will incur the described fees and interest during the extended period.
Council member Liz moved to adopt Resolution No. 2026-10 and Resolution FA2026-01; the motion was seconded and carried by voice vote. The council members present at roll call—Jeremy Silva, Scott Fung, Lorraine Murphy, Mario and Mayor Jose Abios—voted in favor.
The amendment allows the city to continue work on the community center project while the USDA completes its reviews; staff said most added costs will be charged to the community center project budget and that bond counsel and other advisors would complete the required documentation.
The council did not amend the resolutions further and directed staff to complete final execution of the documents and related certificates as authorized.
The adoption is effective immediately; staff noted the change is an interim financing adjustment while the USDA loan closing is finalized.