AGENDA CAPTION:
Title
Consider approval of Ordinance 2026-18, on the first and final reading, authorizing the issuance and sale of City of San Marcos, Texas General Obligation Refunding Bonds in an amount not to exceed $61,135,000.00 in one or more series; approving an official statement, a paying agent/registrar agreement, a bond purchase agreement, and an escrow agreement; establishing the procedures for selling and delivering one or more series of the bonds and other matters related thereto; and providing for the approval of this Ordinance 2026-18, on one reading as authorized by state law.
Body
Meeting date: April 21, 2026
Department: Finance
Amount & Source of Funding
Funds Required: N/A
Account or Project Number (C = CIP funds): N/A
Funds Available: N/A
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Prior Council Action: N/A
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Background Information:
The Finance Department works with the City’s Financial Advisor, Dan Wegmiller of Specialized Public Finance, Inc., to identify opportunities to refund existing bonds and generate interest savings. The City saves money by issuing new bonds with more favorable terms to pay off existing bonds.
A total of $19,335,000 in existing bonds have been identified for refunding that would generate estimated savings of $742,192. Actual savings depend on market conditions when the bonds are refunded. Refunding bonds will not extend the maturity schedule; the new bonds will follow the same repayment timeline as the existing bonds.
Texas law provides two methods for refunding bonds:
1. Adopt an ordinance that includes all final pricing terms (similar to issuing new bonds for the capital improvement program); or
2. Adopt a delegation ordinance that authorizes a designated City officer or employee to set the final pricing terms within parameters approved by City Council.
Option 1 is not recommended due to its tight timing requirements and limited flexibility for entering the market. Option 2 allows the City to price the bonds when market conditions are most favorable. Staff and the City’s Financial Advisor recommend Option 2.
Under Option 2, City Council appoints a Pricing Officer, traditionally the City Manager, with the Director of Finance serving as an alternate. The Pricing Officer may set the final pricing terms as long as they fall within the parameters approved by City Council, which include:
• Maximum principal amount: $61,135,000
• Maximum maturity date: August 15, 2037
• Minimum required net present value savings: 3.0%
• Eligible existing bonds: those meeting the parameters above
The maximum principal amount is set at $61,135,000 (instead of the $19,335,000 currently eligible) to allow the City to take advantage of improved market conditions if additional bonds later qualify for refunding, meeting the minimum 3.0% net present value savings.
The Pricing Officer may not set terms outside these parameters. The delegation expires at 5:00 p.m. CST on April 21, 2027, although bonds priced before that deadline may be delivered afterward.
Once pricing is finalized, the Pricing Officer will sign a Pricing Certificate prepared by Bond Counsel. Together, the Pricing Certificate and the delegation ordinance constitute the City’s official authorization for the refunding bonds. No further Council action is required. Staff will update Council once the refunding is completed or with status updates.
Council Committee, Board/Commission Action:
N/A
Alternatives:
N/A
Recommendation:
City Council approve the ordinance authorizing the issuance and sale of General Obligation Refunding Bonds.