LOCAL GOVERNMENT

The city of Copperas Cove will issue certificates of obligation for the upcoming Fiscal Year 2021 for less than was originally projected.

The “not-to-exceed” principal amount agreed upon by the city council in previous meetings was $9.605 million.

Certificates of obligation that will be issued total a principal amount of $8.215 million, according to Garry Kimball of Specialized Public Finance, who serves as the city’s financial advisor.

“We’re well within the published limit,” Kimball said on the phone during Tuesday’s city council meeting. “The target net proceeds of $9.46 — approximately — million was met, and the actual interest rate came in at 1.697%, versus the budgeted rate of approximately 3.1%, so we’re well below where we budgeted to be.”

On March 16 and 30 as well as May 18, the city council had planning sessions for the proposed budget for the upcoming fiscal year.

On June 1, the city council approved a resolution requiring the publication of a Notice of Intent to issue the certificates of obligation.

The certificates of obligation include the purchase of various capital items and projects, including a road reconstruction of Deer Flat Drive and Oak Hill Drive, Parks and Recreation improvements and a replacement of the UV disinfection system at the Northwest Wastewater Treatment Plant.

Estimated principal and interest payments are included in the FY 2021 proposed budget.

Kimball said the lower principal amount and the lower interest rate is partially a product of budgeting a cushion, but also seeing a “significant rally” in interest rates over the last four weeks.

“We’ve met or exceeded all of our budget targets for the certificates of obligation,” Kimball said.

The current property tax rate for the city of Copperas Cove is 78.65 cents per $100 of assessed valuation, which the council adopted on Aug. 4, 2020.

The city council is expected to discuss the tax rate on Tuesday, with the first public hearing for the budget expected to occur on Thursday.

The council is expected to hold a second public hearing on the budget, as well as adopt the tax rate, the budget and the fee schedule on Aug. 10.

Interest savings

In the next agenda item of the meeting, Kimball explained to the council that the city would experience an interest savings on previously issued general obligation bonds via refinancing.

“Because of favorable interest rates in the market, we were able to beat our budget expectation for refinancing of two previously issued series of bonds by the city, totaling $2.155 million,” Kimball said. “The interest rate on those previously issued bonds was just over 3.5%, and we were able to lower that interest rate down to 1.7%, and the savings associated with that came in at just under $230,000.”

Kimball said the net savings will be realized over a 17-year period, or approximately $14,000 per year. 

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