City Council Amends Public Utility System Bond Ordinance
City Council approved an ordinance authorizing a first amendment to the ordinance providing for the issuance and sale of combined public utility system revenue bonds in a principal amount not exceeding $10,000,000 for the City of Newberry, including provisions for the issuance of bond anticipation notes and other matters related thereto.
Motion to approve first reading of the ordinance was made by Councilperson Lemont Glasgow and seconded by Councilperson David DuBose at a special meeting on Tuesday, August 18.
Mayor Foster Senn said on Friday, August 14, Lawrence Flynn, the city’s bond attorney called and said the city needed to clarify something on the bond.
In June, city council adopted an ordinance authorizing the issuance and sale of combined utility system revenue bonds in an amount not exceeding $10,000,000.
Flynn said with a series ordinance such as this, they typically like to put some restrictions in place so that city staff cannot sell bonds beyond the parameters that council has set.
The original ordinance authorized the final maturity of the series 2026 bonds to be no later than April 1, 2056. However, when the city went to market to sell the bonds, Flynn said the financing schedule was adjusted to establish a final maturity date of August 1, 2056.
While not a problem, Flynn said, an amendment was needed to allow the bonds’ maturity provision to be extended by four months.
“It’s kind of a technical adjustment, but one of those things we definitely need to have as we finalize the debt,” he said.
The amendment does not change the authorized principal amount of the bonds, which remains not to exceed $10,000,000.
Flynn spoke to city staff’s hard work and professionalism on the bond sales.
“A lot of time, energy and effort was put into this,” he said.
City Manager Jason Taylor said the bond sales were a good reflection of Finance Director Shannon Smith’s work and the city’s adherence to good financial rules over the years.
Taylor said the city received a strong response when the bonds were sold on August 12, giving them a lower interest rate than what was anticipated.
The money being borrowed is being reinvested in the city’s utilities, Taylor said to include projects such as the wastewater treatment plant influent pump station, PFAS testing, electric upgrades along Wilson Road and more.
“We’ll be strengthening our utilities to hopefully attract more investment into the community,” Taylor said.
Utility Director Scott Motsinger said the leveraging of the grants within this bond issuance really spoke to a lot of what was done before he came on board.
“I think it’s a great way to use money,” he said.
The sale of the bond resulted in total proceeds of approximately $8.4 million, of which approximately $8 million will be used for the aforementioned projects. The remaining bond proceeds will be used to pay cost of issuance, underwriter’s discount, bond insurance and the surety bond.
The final “True Interest Cost” on the bonds, Motsinger said was 4.55%.
Motsinger spoke of council doing things that are not always the easiest of decisions but help to keep the city’s utility healthy and the city financially healthy with their leadership.
“These are the kind of results that we see as a result of that,” he said.
Senn inquired as to if the city would have the ability to pay off some of the bonds early, if financially possible.
Flynn said the bonds were typically locked from being redeemed within the first 10 years that they’re outstanding. At that point, the city could take funding, place it into a restrictive investment vehicle, he said, and the bonds would be deemed paid off because that investment vehicle would be structured in such a way that there was enough money to pay both the principal and interest payments through maturity of the bond.
“That would be a good problem to have and something we could definitely discuss with your financial advisors if it became a possibility,” Flynn said.
A second and final reading of the ordinance was held on Monday, August 24 in an additional special meeting of council. Motion to approve second reading was made by Councilperson David DuBose and seconded by Councilperson Carlton Kinard.
City Council approved an ordinance authorizing a first amendment to the ordinance providing for the issuance and sale of combined public utility system revenue bonds in a principal amount not exceeding $10,000,000 for the City of Newberry, including provisions for the issuance of bond anticipation notes and other matters related thereto.
Motion to approve first reading of the ordinance was made by Councilperson Lemont Glasgow and seconded by Councilperson David DuBose at a special meeting on Tuesday, August 18.
Mayor Foster Senn said on Friday, August 14, Lawrence Flynn, the city’s bond attorney called and said the city needed to clarify something on the bond.
In June, city council adopted an ordinance authorizing the issuance and sale of combined utility system revenue bonds in an amount not exceeding $10,000,000.
Flynn said with a series ordinance such as this, they typically like to put some restrictions in place so that city staff cannot sell bonds beyond the parameters that council has set.
The original ordinance authorized the final maturity of the series 2026 bonds to be no later than April 1, 2056. However, when the city went to market to sell the bonds, Flynn said the financing schedule was adjusted to establish a final maturity date of August 1, 2056.
While not a problem, Flynn said, an amendment was needed to allow the bonds’ maturity provision to be extended by four months.
“It’s kind of a technical adjustment, but one of those things we definitely need to have as we finalize the debt,” he said.
The amendment does not change the authorized principal amount of the bonds, which remains not to exceed $10,000,000.
Flynn spoke to city staff’s hard work and professionalism on the bond sales.
“A lot of time, energy and effort was put into this,” he said.
City Manager Jason Taylor said the bond sales were a good reflection of Finance Director Shannon Smith’s work and the city’s adherence to good financial rules over the years.
Taylor said the city received a strong response when the bonds were sold on August 12, giving them a lower interest rate than what was anticipated.
The money being borrowed is being reinvested in the city’s utilities, Taylor said to include projects such as the wastewater treatment plant influent pump station, PFAS testing, electric upgrades along Wilson Road and more.
“We’ll be strengthening our utilities to hopefully attract more investment into the community,” Taylor said.
Utility Director Scott Motsinger said the leveraging of the grants within this bond issuance really spoke to a lot of what was done before he came on board.
“I think it’s a great way to use money,” he said.
The sale of the bond resulted in total proceeds of approximately $8.4 million, of which approximately $8 million will be used for the aforementioned projects. The remaining bond proceeds will be used to pay cost of issuance, underwriter’s discount, bond insurance and the surety bond.
The final “True Interest Cost” on the bonds, Motsinger said was 4.55%.
Motsinger spoke of council doing things that are not always the easiest of decisions but help to keep the city’s utility healthy and the city financially healthy with their leadership.
“These are the kind of results that we see as a result of that,” he said.
Senn inquired as to if the city would have the ability to pay off some of the bonds early, if financially possible.
Flynn said the bonds were typically locked from being redeemed within the first 10 years that they’re outstanding. At that point, the city could take funding, place it into a restrictive investment vehicle, he said, and the bonds would be deemed paid off because that investment vehicle would be structured in such a way that there was enough money to pay both the principal and interest payments through maturity of the bond.
“That would be a good problem to have and something we could definitely discuss with your financial advisors if it became a possibility,” Flynn said.
A second and final reading of the ordinance was held on Monday, August 24 in an additional special meeting of council. Motion to approve second reading was made by Councilperson David DuBose and seconded by Councilperson Carlton Kinard.
