City of Eagle Pass Seeks $8M Certificates of Obligation in 2016
By: Jose G. Landa, Copyright 2015, Eagle Pass Business Journal, Inc.
The Eagle Pass City Council and Administration are seeking to issue out Tax Revenue Certificates of Obligation of $8,000,000 (Million) during fiscal year 2016 to fund projects such as the Public Library expansion and renovations, Public Safety Headquarters, drainage projects, street repairs and maintenance, recreational infrastructure, and capital improvements, according to a City Council Workshop held on Thursday, April 9, 2015.
According to the City Administration and financial advisor David Gonzalez of Hinojosa, Estrada & Associates, this new round of $8 Million certificates of obligation will more than likely cause a tax rate increase to the City of Eagle Pass taxpayers of up to 4.0 cents per every $100 on the property tax rates for the coming 2016 year. Since the $8 Million that the City of Eagle Pass will be borrowing to pay for these capital improvements will be backed by the tax revenues of the City, City taxpayers will more than likely be seeing up to 4 cents per $100 evaluation on their ad valorem tax rates in 2016 in order to pay for these funds.
During the Workshop, City Council heard a presentation from David Gonzalez of Hinojosa, Estrada & Associates, the city’s financial advisors on the proposed certificates of obligation.
Eagle Pass City Manager Gloria Barrientos stated that under the scope of the $8,000,000 Certificates of Obligation it would include funds for street repair and maintenance at $2,200,000, proposed parks funding requested $1,935,000, Public Safety headquarters at $2,900,000, and library renovations at $300,000.
“This gives us a total of $7,390,000 that would be required to complete the projects that have been discussed,” said Barrientos.
Barrientos discussed other certain projects that were mentioned during the workshop that will be looked at by the City to possibly begin ascertain the viability of setting the foundation to those other proposed projects, including roof repairs to city buildings, proposed purchase of the Alamo Lumber property owned by Union Pacific Railroad, cost to address the plans for the Fire Department on Quarry Street, and other projects that could be taken into consideration under the funding from the new Certificates of Obligation.
“In 2013, we did $8,500,000 certificates of obligation and that resulted in an $4.5 cent tax increase, at that time we went out and issued the certificates in the open market and Standards and Poor’s gave the city an upgrade from A to AA and the audit came out last week and the financials still look pretty strong,” said Gonzalez.
“So financially you all are in a pretty good position, you are in a strong position where to where $4.5 cents, yes we all know that nobody likes taxes, nobody likes to pay taxes but at the end of the day the projects that we are talking about if you don’t take care of them now they’re just going to cost you more money later,” added Gonzalez.
Gonzalez also stated that at this point interest rates are on the rise. “So the longer you wait the more this is going to cost,” Gonzalez advised City Council.
“Once we get a hard number we then go ahead and do the analysis and come back to a regular scheduled board meeting and tell you exactly how much it is going to cost. What impact you can see on your INS tax rate and then we can present a time table of events, whether we are going to do a private placement or an open market transaction,” said Gonzalez.
“From the time we do a notice of intention to the time we close on the CO’S and then the city receives the monies at the most we are looking at 90 days,” said Gonzalez.
Mayor Pro-Tem Luis E. Sifuentes then asked Gonzalez if the city was to go with $7,300,000 when would an analysis be ready to go.
“We can come back at the next regular meeting with the preliminary analysis with a preliminary plan of finance and bring bond counsel and you can give us direction at that point to go ahead and proceed to move forward with the notice of intention. From there we start working and getting all the documents ready and then start bidding it out,” replied Gonzalez.
Gonzalez also stated that both the private and open markets would be looked at to determine who would provide a better interest rate at the time the city is ready to pull the trigger.
“It’s just a matter of determining who is going to provide the cheaper interest rate for the city,” said Gonzalez.
“If we have a hard amount of what we want to finance we can be back by the April 21,2015 meeting with the analysis and plan of finance, time tables ,etc, etc.” added Gonzalez
“The other thing is that whenever we have done the certificates of obligation in the past sometimes you want cushion in numbers and a lot of time we’ll say an amount not to exceed a specific amount. That gives you the cushion if there are any other things you want to finance,” said Gonzalez.
Eagle Pass City Manager Gloria Barrientos then stated that the $7,300,000 did not include the cost of issuance.
“You would have to give us an estimate of the cost to add to this amount.” Said Barrientos.
“And that is where the cushion is.” Said Sifuentes.
“Exactly.” Said Gonzalez. The cost of issuance includes fees and commissions to the City’s financial advisors and issuers of the certificates of obligation.
Sifuentes then asked if administration was ready to give out a specific number being looked at.
“We are comfortable with the numbers that we have presented here, however, we just mentioned a list of items that were not included in these numbers,” said Barrientos.
Mayor Ramsey English Cantu stated that he would recommend to finalize the numbers by the April 21, 2015 meeting
“That way we can look at the numbers and determine the final amount at the April 21, 2015 meeting.” Said Cantu.
City Council and administration concurred to finalize the amount of funding to be sought through the certificates of obligation not to exceed $8,000,000 and to act on the procedures at their next meeting.
Mayor Cantu stated that as the city prepares to seek funding through the new round of tax notes that it is done all for the betterment of the community on things that are needed and that had not been acted on in previous years.
Councilman William (Billy ) Davis was not present at the workshop meeting.
In 2013, the City of Eagle Pass, Texas City Council unanimously approved an Ordinance authorizing the issuance of $8.5 Million of City of Eagle Pass, Texas Combination Tax and Limited Pledge of Revenue Certificate of Obligations, Series 2013, at its Special Meeting held on Tuesday, November 19, 2013.
The City of Eagle Pass sought to use these $8.5 Million of bonds for improvement of certain public infrastructure, real properties, buildings, and other city projects to provide better services and quality of life programs in the city. Among the projects included in 2013 are the repair of city drainage projects, streets, and detention ponds damaged by the June 14-15, 2013 floods, the renovations to the Eagle Pass Public Library, the acquisition and/or renovations to the National Guard building for use as the new Eagle Pass Police Department headquarters, and other city projects.
The new proposed $8 Million in 2016 will be used to complete the new Public Safety Headquarters, Public Library renovations, street drainage and paving, recreational activities or parks, and other capital improvements and infrastructure.
