Sherman issued $19.5 million this week at an interest rate that will save the city $1.57 million over the rate used for budgeting.
Following a public hearing on the issuance of the $19.5 million in certificates of obligation that saw no one come forward to speak, the Sherman City Council unanimously authorized the issuance. City staff said the funds generated from the sale of the bonds will go toward the construction of sports fields at Pecan Grove West Park, infrastructure in the city’s Tax Increment Reinvestment Zone No. 7 on the southeast corner of the intersection of U.S. Highway 75 and FM 1417, participation in work begin done by the Texas Department of Transportation and street projects such as the West Travis Street development.
“This morning the city accepted competitive bids for our latest certificate of obligation issuance that the council approved,” Director of Finance Mary Lawrence said. “It’s for $19.5 million for projects such as our match on some TxDOT projects, the Park Avenue realignment, Northgate Drive, Travis Street West and Pecan Grove ball fields.”
In a document prepared for the council in June, city staff noted the estimated debt service for the certificates of obligation will be approximately $1.3 million and will be paid for through Sherman’s ad valorem tax revenue. When the debt issuance was first discussed with the council, Lawrence said the issuance would be for 25 years and the debt service was already included in the fiscal year 2018-2019 budget.
Garry Kimble, managing director for the city’s financial adviser Specialized Public Finance, told the council the response to the city’s debt issuance was impressive.
“We accepted bids from seven different bidders representing 35 different firms,” Kimble said. “The winning bidder was Robert W. Baird and Co. with a winning bid of 3.46 percent rounded — it’s a 25-year fixed rate. It compares favorably to the budgeted rate we used of 3.93 (percent). The difference in total interest expense over the term of the deal is approximately $1.57 million to the good.”
The work being done by TxDOT includes a the widening of FM 1417 and a ramp reversal project on northbound Hwy. 75, south of the TIRZ No. 7 development. That reinvestment zone was put in place last year and is where the Schulman’s Movie Bowl Grille development will be on the city’s south side.
“I’m excited about the park,” Hefton said in June of which project he was most looking forward to seeing complete. “(I’m) excited about the roads as well, but it’s kind of a little bit more difficult to be excited about streets than it is about a nice park. All of them are important, but particularly interested in seeing how the park turns out.”
The planned Pecan Grove Athletic Complex will include four baseball and softball fields, a large soccer area that could incorporate multiple fields at once, and some neighborhood park features such as a splash pad, playground and pavilion.
Draft budget, tax rate
During the meeting, the council also reviewed the 2018-2019 draft budget and the draft Capital Improvement Program 2018-2023, and discussed the proposed tax rate of 42.73 cents per $100 of valuation for the upcoming fiscal year.
“The proposed tax rate for next year is unchanged from the current year but since the proposed tax rate exceeds the effective tax rate, we’re required by law to hold two public hearings,” Lawrence said, adding the city expects to collect more money from taxes in the new year than it did during the current fiscal year.
When reviewing the budget with the council members, Lawrence said it was substantially the same budget as what they looked at during the budget workshop in June.
“It has $67 million for operations and $32 million for capital projects, much of which was in the debt issuance we did earlier this evening, and it also includes some projects funded by GTUA (Greater Texoma Utility Authority),” Lawrence said. “We’ll have the public hearing on the budget and a request to adopt the budget on the Aug. 20 agenda.”
Lawrence explained the review of the capital improvement program was required by the city charter.
“The items are not all funded for all five years, but the first year is funded as part of the annual budget,” Lawrence said. “The final plan will be (up) for your approval on the Aug. 20 agenda.”
Council member Willie Steele said he had some questions about the plan that he intended to raise when the council considers the plan for approval during that meeting.