Eagle Pass City Council Approves to Refinance Up to $5 Million of City Bonds to Save Money

By: Miguel Munoz, Eagle Pass Business Journal, Inc., Copyright 2017

The City of Eagle Pass, Texas City Council unanimously approved to authorize the issuance of “City of Eagle Pass, Texas Waterworks and Sewer System Revenue Refunding Bonds, Series 2017” in order to refinance up to $5 Million of City Bonds of pre-existing debt as a measure to save over $200,000 in interest to the City of Eagle Pass at its regular meeting held on Tuesday, June 6, 2017.

City Financial Advisor David Gonzalez of Estrada & Hinojosa of Dallas, Texas advised City Council that his firm had identified $4,545,000 Million of existing City Bonds that qualified for refinancing at a significant savings in interest cost to the City if it chose to refinance these debt through the issuance of up to $5 Million of Series 2017 Bonds by the City of Eagle Pass Waterworks and Sewer System.

Gonzalez stated that the City of Eagle Pass would save over $200,000 in interest costs if the City Council approved to refinance certain existing City Bonds under the auspices of the City of Eagle Pass Water Works and Sewer System, Series 2017 issuance of Bonds up to $5 Million.

Gonzalez noted that the cost to the City of Eagle Pass for refinancing and issuing the 2017 Series Bonds would be $95,000, but that the overall savings to the City of Eagle Pass would result in a savings of over $200,000 in lower interest costs than the existing interest rate on these $4,545,000 existing City bonds.

City Bond Counsel Johnny Aguilera of San Antonio, Texas advised City Council that if the City Council decided to approve the refinancing and issuance of new Bonds under 2017 Series, the City of Eagle Pass would authorize its Bond Counsel and Financial Advisors to issue the “City of Waterworks and Sewer System Revenue Refunding Bonds, Series 2017” within certain parameters, including the issuance of up to $5 Million in Bonds provided the interest rate on these refinancing does not surpass a certain interest rate that is beneficial to the City of Eagle Pass and provide a savings of over $200,000 in interest costs.

Gonzalez noted that if the City Council approved the refinancing and issuance of new Series 2017 Bonds, his firm would shop the Bond market to make sure the City obtains the best possible interest rate and maximize its savings.

Aguilera noted that if the City approved this measure, the City’s Financial Advisors and Bond Counsel would have a six-month period window to shop the lowest interest rate possible and that if they were unsuccessful to obtain results within the parameters established by the City Council, then the Series 2017 Bonds would be withdrawn from the market and not issued.

Gonzalez added that the Bond market fluctuates every day and it is difficult to predict exactly at what interest rate the City could obtain for these bonds, but that the City of Eagle Pass enjoys a Moody’s Rating of AA, which is excellent, and the City Waterworks System similarly enjoys a double A rating as well.

After a brief discussion, City Councilwoman Gloria E. Hernandez motioned to approve the issuance of “City of Eagle Pass, Texas Waterworks and Sewer System Revenue Refunding Bonds, Series 2017” and Councilman Rudy Villalpando seconded the motion. The City Council unanimously approved the motion, authorizing the City Bond Counsel and Financial Advisors to proceed with the issuance of up to $5 Million in Bonds to refinance existing City Bonds. Councilman Luis E. Sifuentes was not present at this meeting.