Commission approves interim financing ordinance for USDA water-system project
Summary
The commission adopted Ordinance 773 authorizing a $2.673 million interim loan (5% for three years) to fund water-line improvements that will be refinanced with USDA bonds; the pledge is limited to water-system revenues and the ordinance passed on a roll-call vote.
The Truth or Consequences City Commission voted to adopt Ordinance 773 authorizing interim financing to begin construction on a USDA-backed water system improvement project.
A presenter described the financing structure: interim financing with Bank of the Southwest for $2,673,000 at an estimated 5% rate and three-year maturity, with interest accruing only as principal is drawn. After construction is completed, the presenter said, USDA will purchase long-term bonds that are expected to convert the interim loan into a 40-year bond at about 2.125%.
"The pledge that you are using to pay this back, unlike the GO bonds, is limited solely to the water system revenues," the presenter said, explaining that the city's revenue bond rules require a higher approval threshold than general-obligation debt. Commissioners discussed the statutory approval threshold and the need for a supermajority when issuing revenue bonds.
The item was opened for a public hearing; no members of the public asked to speak on the ordinance during the hearing. A motion to adopt Ordinance 773 carried on roll-call vote and the ordinance was approved.
City officials said the interim loan structure is intended to provide construction cashflow until USDA closes on the long-term purchase of the bonds, and staff will proceed with closing and drawdown planning.
The commission recorded the vote in the meeting minutes and moved on to the next agenda items.
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