City receives rating upgrade, refinances just over $40 million in debt

Refinancing will save nearly $7.5 million over life of bonds

The City of Round Rock will save nearly $7.5 million, or about $400,000 a year, in interest payments after refinancing a portion of its general obligation and utility debt. The City’s utility system rating was upgraded to AA+, while the general obligation rating of AA+ was affirmed. The ratings were issued by Standard and Poors.

The utility system debt is repaid through water and wastewater revenues, while the general obligation debt is repaid through property taxes.

The bulk of the savings are from the utility system refinance of $33.8 million in revenue bonds issued in 2009 to purchase a wastewater treatment plant from the Lower Colorado River Authority. Round Rock and the cities of Austin and Cedar Park partnered on the purchase.

The rating upgrade rationale included:

  • Robust, growing, and diversifying service area economy … and income levels that have remained very strong
  • Good operational management policies and practices
  • Good financial management policies and practices
  • Extremely strong liquidity

The utility refinance savings total $6 million total, about $300,000 a year. The new interest rate is 2.75 percent, compared to the original 5.0 percent.

The remaining savings are coming from the refinancing of $7.4 million in certificates of obligation issued in 2007 for improvements to Old Settlers Park and participation in an indoor swim center at the YMCA.

The rating affirmation for the general obligation included:

  • Very strong management, with “strong” financial policies and practices
  • Very strong budgetary flexibility
  • Very strong liquidity
  • Strong budgetary performance, with operating surpluses in the general fund

The general obligation savings will be $1.5 million total, or about $89,000 a year. The new interest rate is 2.14 percent, compared to the original 4.76 percent.

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