The City of San Marcos has been granted an upgrade in its Standard & Poor’s long-term bond rating from “AA-“ to “AA” on outstanding general obligation debt, an improvement that will save taxpayers money on repaying debt that finances major capital projects.
The AA/Stable rating is part of the city’s credit profile for refinancing $22.8 million in existing debt at a lower interest rate, as well as issuing $13.7 million in combination and tax and revenue certificates of obligation that will pay for 2014 capital improvements.
“We are very happy to see the improvement in our bond rating,” said City Manager Jared Miller. “This shows the strength of the city council’s financial policies, the diligence of our staff in the budgeting and management of public funds, and a sound, growing economy.”
The ratings report from S&P cited several key factors in upgrading the city’s bond rating, including the economy of the San Marcos area, the stabilizing economic influence of Texas State University, management conditions and financial practices of the city, budgetary flexibility including General Fund reserves at 38.2 percent, liquidity and budget performance.
The city council on Tuesday authorized the potential issuance of up to $90 million in refunding bonds to refinance previous bond projects at a lower interest rate over the next year.
“The city only refinances debt when we can realize at least 3 percent savings and the term of the bond is not extended,” said Steve Parker, chief finance officer and an assistant city manager. “Currently it looks like we have between $20 to $28 million in GO bonds that are eligible under this criteria, which could mean a savings between $1.1 to $1.8 million.”
In addition, the council approved the sale of $13.7 million in certificates of obligation to pay for 2014 capital improvement projects. The bond sale will pay for public safety equipment, continued river bank improvements in conjunction with the Habitat Conservation Plan, street and sidewalk projects, water, wastewater and drainage improvements, electric utility projects and airport improvements.
— MELISSA MILLECAM/CITY OF SAN MARCOS