By TYLER MASK
As a part of an ongoing discussion, the Weatherford Municipal Utilities Board Tuesday afternoon convened in a special board session to hear a presentation from City of Weatherford Finance Director David Croft regarding the utility fund debt review as of June 2014, and to learn more about the cost of service and rate design study from NewGen Strategies and Solutions.
Utility fund debt review
At the beginning of his presentation, Croft reminded the board that the current debt structure was not “kicking the can down the road.” When the city refunded 2005 and 2008 bonds, which were the most recent refunded bonds, the city successfully attained lower interest rates while keeping the existing amortization levels in place.
“Had we gone out and reissued a new 20-year or 30-year amortization for the refunding bond, yes that would be kicking the can down the road, but we did not do that,” Croft said.
The 2005 and 2008 bonds will be paid off in 2018, and the 2006 bond, which was a brand new issue, will continue until 2026.
In 2018, when the 2005 and 2008 bonds are paid off, if interest rates remain the same as they are now, it would open up approximately $20 million in debt service capacity that could be reissued. In 2026, the city will be opened to tacking on an additional $11 million in debt service capacity.
The board, doubting that rates will remain stagnant, asked Croft what would happen if the rates doubled by the time the city could take on new debt.
The answer was that they’d be able to take on approximately half of what is currently projected, Croft said.
The council proceeded to ask if paying for rate protection was a possibility and what it would cost to secure this type of insurance. Croft said it can be done, but did not have the details on hand.