San Angelo City Council on Tuesday reviewed the timeline for issuing $41.66 million in general obligation bonds approved by voters to finance upgrades to the city’s Coliseum, and discussed whether to make the bond sale accessible to local investors.
Managing Director at Specialized Public Finance Inc. (SPFI), Vince Viaille, presented the proposed financing plan for bonds, which are expected to be sold in July with proceeds delivered to the city by mid-August.
“What we’re going to do with this is we’re going to move this to the marketplace and issue these bonds in the marketplace,” said Viaille. “Hopefully … we should be coming back to you all in July with the interest rates on these GO bonds and where they sold and the purchasers, and at that time you’ll consider the ordinance authorizing the issuance of the GO bonds.”
The process began the week of May 26 with the distribution of a Preliminary Official Statement and requests for bond ratings from S&P Global Ratings and Fitch Ratings.
Rating agency conference calls are scheduled for the week of June 9, with official ratings expected by July 7.
On July 14, the city will receive bids for the bonds, and on July 15, City Council will vote on whether to authorize issuance.
Delivery of bond proceeds is scheduled for Aug. 14, when funds will be deposited into the city’s capital project bond fund.
The City is weighing two possible methods for bond issuance: competitive bid or negotiated sale. The city has historically used the competitive process, in which underwriters and financial institutions submit bids based on interest rates in an open and transparent market.
However, SPFI noted the alternative negotiated sale method could provide local residents and institutions early access to purchase bonds.
“If it is our desire to try to round up local interest on this bond issue and local participation to make sure that they are adequately provided with opportunity to buy these bonds, we should do a negotiated sale as compared to a competitive bid sale,” Viaille said. “We are prepared to pivot and do that if that is the city’s desire.”
He explained that in a negotiated sale, the City could designate a “local order period” during which only San Angelo residents and financial institutions could purchase the bonds before opening the sale to the broader market.
Mayor Tom Thompson voiced support for a locally-focused option. “It would be great to keep this in a community market,” he said.
“We’re going to make some decisions here within the next week or two which way to go with this, and I sure like leaving it open for the local people, because they have interest in it, they want to have skin in the game, it’s a good way to carry on.”
Viaille confirmed that there would be no difference in fees to the City regardless of which sale method is chosen.
Council members are expected to decide soon whether to proceed with a competitive or negotiated sale. The final approval and sale of the bonds is scheduled for July, with detailed information on rates, underwriters, and comparable market activity to be presented at that time.
San Angelo currently holds strong credit ratings of AA (S&P) and AA+ (Fitch). According to Viaille, those ratings are expected to remain unchanged. Ratings in the AA category indicate a very strong capacity to meet financial commitments and are considered high-grade by market standards.
