The Coppell City Council approved the issuance and sale of Combination Tax and Limited Surplus Revenue Certificates of Obligations (COs) on Tuesday, which will help fund City street and water and sewer projects.
Five bids were received during a competitive bid process on April 27 and the lowest bid of 1.637 percent was accepted. The City’s financial advisor Jason Hughes of Hilltop Securities said the COs sold with a premium, meaning the investor paid more than 100 cents on the dollar. While $21.61 million worth of COs were sold, the City will receive about $23 million on closing. It is a 20-year term with a 1.637 percent fixed interest rate.
“We had about $26.4 million that we sold last year, and if you look at this sale today as well as last year’s CO sale your weighted cost of capital is about 1.47 percent for 20-year debt,” Hughes said. “That is extremely low and the lower the debt service the less impact to citizens, so we’re very happy with that.”
The majority of the funds — $16 million — will go to the Belt Line Road project and the remaining $7 million will be used for a water system redundancy project, the painting and rehabilitation of Water Tower #2, and the replacement of various large diameter water lines.
The Council also authorized the issuance and sale of General Obligation Refunding Bonds, which helped lower the interest rate on two 2011 issues, resulting in $1.5 million in gross savings. Hughes said the City’s AAA credit ratings played a large role in obtaining these low interest rates.
The Texas Attorney General’s office reviews all public debt transactions in the state of Texas, which will take about 30 days. The bonds are scheduled to be closed on May 27, 2021.