Item # 14 - Refunding Bond 2020

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CITY OF ALAMO HEIGHTS
ADMINISTRATION AND FINANCE DEPARTMENT
CITY COUNCIL AGENDA MEMORANDUM
TO: Mayor and City Council
FROM: Robert Galindo, Finance Director
SUBJECT: General Obligation Refunding Bonds, Series 2020 Results
DATE: December 14, 2020
BACKGROUND INFORMATION
On August 10, 2020 City Council approved an ordinance authorizing the issuance of Refunding
Bonds Series 2020. The refunding was completed and a presentation will be given to Council on
the final results of the refunding.
SUMMARY OF ACTION ITEM
In 2012, the City issued $6,300,000 in principal amount of General Obligation Bonds to finance
the design and construction of a new city hall building. The Bonds were outstanding in the
principal amount of $5,080,000, bearing interest rates from 2.000% to 2.625% per annum, and
payable as to principal on August 15 in the years 2020 through 2032. The General Obligation
Bonds that matured on and after August 15, 2021 aggregating $4,895,000 in principal amount
were eligible to be redeemed at par at the option of the City beginning on August 15, 2020. Debt
service on the outstanding Bonds was approximately $470,000 per year through FY 2032.
The City's Financial Advisor (Anne Burger Entrekin with Hilltop Securities) recommended the
City consider issuing General Obligation Refunding Bonds (the "Refunding Bonds") to refund
the "callable" Certificates (those maturing on and after August 15, 2021) to achieve debt service
savings. Ms. Entrekin will present the financial results from the refunding.
POLICY ANALYSIS
The refunding of the bonds is consistent with the city’s policy to maximize savings.
LEGAL AUTHORITY
The Bonds were issued pursuant to authority granted under Chapter 1207 of the Texas
Government Code.

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FISCAL IMPACT
The issuance of the Refunding Bonds did reduce the City's debt service payments and saved the
City $297,453 in debt service.
ATTACHMENTS
Attachment A - Presentation
Robert Galindo
Finance Director
Buddy Kuhn
City Manager

Member FINRA / SIPC / NYSE
© 2020 Hilltop Securities Inc.
All Rights Reserved
Contacts
Transaction Summary Presentation
Anne Burger Entrekin
Regional Managing Director
anne.burgerentrekin@hilltopsecurities.com
70 Northeast Loop 410, Suite 710
San Antonio, Texas 78216
Direct: 210.308.2200
December 14, 2020 City of Alamo Heights, Texas
Michael Martin
Assistant Vice President
michael.martin@hilltopsecurities.com
1201 Elm Street, Suite 3500
Dallas, Texas 75270
Direct: 214.859.1731
Mario Hernandez
Assistant Vice President
mario.hernandez@hilltopsecurities.com
1201 Elm Street, Suite 3500
Dallas, Texas 75270
Direct: 214.953.4182
Attachment A

All Rights Reserved
S&P Rating
Attachment A

All Rights Reserved
“The rating reflects the city’s:
• Very strong economy,
• Very strong management;
• Very strong budget flexibility;
• Very strong liquidity;
• Strong debt and contingent liability profile;
• Strong institutional framework.”
“We view the city's management as very strong, with strong financial policies and practices under our
financial management assessment methodology, indicating our view that financial practices are strong,
well embedded, and likely sustainable.”
“Alamo Heights' budgetary flexibility is very strong, in our view, with an available fund balance in fiscal
2019 of 54% of operating expenditures, or $5.4 million. We expect the available fund balance to remain
above 30% of expenditures for the current and next fiscal years, which we view as a positive credit
factor.”
“In our opinion, Alamo Heights' liquidity is very strong, with total government available cash at 82.5% of
total governmental fund expenditures and 11x governmental debt service in 2019.”
Credit Rating Commentary
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“AAA”/Stable Outlook (Rating Affirmed)
“We consider Alamo Heights' economy very strong. The
city, with an estimated population of 7,232, is located in
Bexar County in the San Antonio‐New Braunfels MSA,
which we consider broad and diverse. The city has a
projected per capita effective buying income of 214% of
the national level and per capita market value of
$264,829.”
Attachment A

All Rights Reserved
Summary of Refunding Results
Attachment A

All Rights Reserved
Summary of Callable Bonds
Callable Maturities 2021‐2032
Coupons 2.00% ‐ 2.625%
Call Date 10/27/2020
General Obligation Bonds, Series 2012
Original Principal $6,300,000
Callable Principal $4,895,000
Maturity Principal Interest Rate Call Date
8/15/2021 355,000$      2.000% 10/27/2020
8/15/2022 365,000         2.000% 10/27/2020
8/15/2023 375,000         2.000% 10/27/2020
8/15/2024 380,000         2.000% 10/27/2020
8/15/2025 390,000         2.000% 10/27/2020
8/15/2026 400,000         2.000% 10/27/2020
8/15/2027 410,000         2.125% 10/27/2020
8/15/2028 420,000         2.125% 10/27/2020
8/15/2029 430,000         2.250% 10/27/2020
8/15/2030 445,000         2.375% 10/27/2020
8/15/2031 455,000         2.500% 10/27/2020
8/15/2032 470,000         2.625% 10/27/2020
4,895,000$
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Attachment A

All Rights Reserved
Refunding Service 2020 Results
General Obligation
Refunding Bonds, Series 2020
Refunding Par Amount $4,530,000
Gross Savings $297,453
Average Annual Savings (2022‐2032) $46,003
Net Present Value Savings $265,781
Present Value Benefit (%) 5.429%
True Interest Cost 1.214%
Date
Prior Debt
Service
Refunding
Debt Service
Projected
Savings
9/30/2021 $461,894 $670,473 ($208,579)
9/30/2022 464,794          427,200         37,594
9/30/2023 467,494          427,750         39,744
9/30/2024 464,994          428,000         36,994
9/30/2025 467,394          426,300         41,094
9/30/2026 469,594          424,500         45,094
9/30/2027 471,594          424,150         47,444
9/30/2028 472,881          423,500         49,381
9/30/2029 473,956          427,550         46,406
9/30/2030 479,281          426,150         53,131
9/30/2031 478,713          424,450         54,263
9/30/2032 482,338          427,450         54,888
$5,654,925 $5,357,473 $297,453
General Obligation Refunding Bonds, Series 2020 ‐ GOs
Series 2012 Structured Savings
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Attachment A

All Rights Reserved
Summary Comparison of Projections to Actual
Projected Series
2020 Refunding(1)
Actual Series
2020 Refunding
Par Amount of Bonds $4,360,000 $4,530,000
Gross Savings $229,075 $297,453
Net Present Value Savings $198,528 $265,781
Savings as a % of Refunded
Bonds
4.055% 5.429%
True Interest Cost 1.410% 1.214%
Call Date 8/15/2030 8/15/2029
 Actual results as compared to projections:
 Gross Savings increased by $68,378 or 30%
 Net Present Value Savings increased by $67,253 or 34%
 Aggregate Savings as a % of Refunded bonds increased from 4.055% to 5.429%
 Call Date negotiated one year sooner
________________
(1) Preliminary numbers dated July 29, 2020
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Attachment A

All Rights Reserved
Summary
Attachment A

All Rights Reserved
 The City achieved debt service savings by effectuating a refunding
transaction at historically low municipal interest rates
 Even with very low coupons from the original Series 2012 bond issue, debt
service savings exceeded savings projections
 We want to express our appreciation to:
 Mr. Kuhn, Mr. Galindo and the rest of the Alamo Heights Staff
 Tom Spurgeon, McCall, Parkhurst and Horton, Bond Counsel
 Frost, Underwriter
 The City of Alamo Heights, for our long-term financial advisory
relationship
Summary
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Attachment A

Item # 14 - Refunding Bond 2020

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