Bond Refunding to Save City Estimated $30.7 Million in Interest
CORPUS CHRISTI, TX – On May 12, 2020, Corpus Christi City Council approved on the first reading the issuance of refunding bonds with the potential to save the City of Corpus Christi more than $30.7 million in interest over the remaining life of both the City’s General Improvement Bonds and Utility Revenue Bonds. The Council will finalize the vote on these financial transactions next Tuesday, May 19, 2020. The Bond Refunding will go to the market in June 2020.
“Any day you can save money is a good day. Instead of paying higher interest rates, we can focus on fixing more streets,” said Mayor Joe McComb. “Building a strong financially managed City has been a top priority for my first year,” said Peter Zanoni, City Manager. “This refunding will continue to put us on that path. Today’s action lays the groundwork to do infrastructure improvement projects in multiple areas,” added Zanoni.
The City’s financial advisors have identified several bond series that are eligible for refunding at this time. The “refunding of a bond” occurs when a lower interest rate is obtained to generate savings over the remaining original life of the bond. Refunding does not extend the original term of the bond, but rather takes advantage of lower interest rates offered in the current market over the remaining life of the bonds.
The City of Corpus Christi plans on refunding up to $334,100,000 of various bond series dependent on the financial markets - $240,000,000 of Utility Revenue Bonds and $94,1000,000 of General Improvement Bonds. If all identified series are refunded, assuming favorable market conditions, the projected annual savings for the City Utility System could be up to an estimated $23,000,000 and $7,700,000 for the General Obligation Debt Service Fund over the life of the bonds. The average life of the identified bond series is 13.7 years with an estimated net present savings of 8.3% for the Utility Revenue Bonds and 8.9 years and with an estimated net present savings of 8.67% for the General Improvement Bonds. These savings can be utilized for needed utility and general improvement projects within the City with no effect on utility rates or the tax rate.
For more information, media representatives can contact Public Information Officer Dale Stephan at 361-826-3234 or by email at DaleS3@cctexas.com.