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Coppell council updates bond‑refunding parameters, approving a 3% present‑value threshold and 3.25% interest cap
Summary
Council repealed an earlier, more conservative refunding ordinance and approved new parameter‑sale parameters (true interest cost not to exceed 3.25%, minimum present‑value savings of 3%) to preserve the option to refinance callable 2013 and 2016 certificates of obligation when market conditions permit.
Coppell’s City Council on June 9 approved an ordinance revising the city’s bond‑refunding parameters to allow staff and the city’s financial adviser to pursue a parameter sale refunding if market conditions meet the updated thresholds.
City staff and Jason Hughes of Hilltop Securities explained the reasoning in a preceding work‑session presentation: the proposed refunding would target the callable 2013 and 2016 certificates of obligation (approximately $10.34 million of outstanding par for the city portion) and use a parameter sale to preserve flexibility in a volatile municipal market. The ordinance replaces an earlier version whose thresholds (2.75% TIC and 5% PV savings) staff said were not attainable in current conditions.
Under the approved parameters, the refunding ordinance sets a maximum true interest cost of 3.25% and a minimum net present‑value savings threshold of 3% (the staff presentation described this as an industry standard). Jason Hughes told the council that market rates would need to move roughly two‑tenths of a percent on the relevant part of the curve to improve savings to the targeted level; he also reviewed typical issuance and underwriting fees, which reduce gross savings to net present‑value savings.
Councilmember Carol Neville moved to approve the ordinance; Mayor Pro Tim Walker seconded. The mayor noted the revised parameters will allow staff and the city’s financial adviser to act quickly if market conditions meet the thresholds; the council recorded affirmative votes and carried the motion.
Next steps: staff will proceed under the new ordinance only if the refunding parameters are met and all required approvals (including any CRDC board action for related revenue bonds) are obtained.
