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McAllen approves $10 million sanitation bonds to upgrade recycling center
Summary
The commission authorized $10 million in sanitation system revenue bonds placed with the North American Development Bank to finance recycling center upgrades, approving terms staff negotiated that include a 10‑year amortization, a true interest cost of about 4.737% and a five‑year par call option.
The McAllen City Commission approved an ordinance authorizing the issuance of $10 million in sanitation system revenue bonds to finance upgrades at the city's recycling center.
Ann Berger of Hilltop Securities told the commission the bonds would be directly placed with the North American Development Bank (NADBank) and described the negotiated structure: removal of a structuring fee and reserve fund requirement (contingent on maintaining 135% debt service coverage), a five‑year call option exercisable at the city's discretion, and a projected true interest cost of 4.737% (the rate set on May 12). Berger said projected revenues available for debt service exceed $6.7 million while the annual debt service is slightly under $1.3 million, providing more than five times coverage. (Speaker: Ann Berger)
Commissioners asked clarifying questions about the call option and the amortization; staff and the financial advisor answered that the call is exercisable at par throughout the five‑year call window. After discussion the commission voted to adopt the ordinance authorizing the bonds. (Speakers: Ann Berger; Staff member; Chair)
The ordinance directs the city to proceed with the bond placement and the recycling center expansion financing as described in staff materials.
