CITY CONTORLLER RONALD GREEN SAVES THE CITY $100 MILLION DOLLARS THROUGH BOND REFINANCING!

With the City of Houston’s most recent refinancing of its 2001 Water & Sewer bonds, savings generated by bond deals executed by the City during the past 12 months will now total more than $100 million over the next several years. Favorable interest rates have caused the City Controller’s Office to aggressively seek the lower rates-without extending the period of indebtedness on any of the bonds. The water and sewer transaction generated over $30.5 million in savings. Wells Fargo served as the lead bank on the transaction, which took place on August 23, 2011. Other firms taking part in the transaction were Morgan Keegan, Ramirez &Co., Loop Capital, Fidelity and Jefferies &Co.

The Controller’s Treasury Division oversees a debt program of approximately $13 billion. The City’s Capital Improvement Plan (CIP)-which includes infrastructure projects such as water and sewer, streets and new facilities like police and fire stations-is funded largely through debt, just as the typical home buyer finances a home with a mortgage.

“The Combined Utility System is a strong credit with recently affirmed ratings of AA by S&P and AA- by Fitch,” says Shawnell Holman, Deputy Controller, Treasury Division. “This was reflected by over $500 million in orders being placed for just under $170 million in bonds. As a result, the City refinanced debt out to 2021 at an extremely low rate of 1.4 percent.”

In August 2011, a bond sale of $212 million by the City’s Combined Utility System to re-finance previously issued bonds resulted in savings of $32 million over nine years. In addition, the City refinanced over $500 million of airport debt saving the City more than $30 million over 15-20 years. Over the past year, the City also refunded general obligation debt and Convention and Entertainment debt achieving over $28 million in savings.

“We are always looking for refunding opportunities to generate savings for the City,” says Houston City Controller Ronald Green. “The market proved to be incredibly favorable for us over the past 12 months, with 10-year municipal rates hitting historic lows and a limited supply of new tax exempt paper in the market.”

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