Several factors allowed the city of Hutto to save approximately $3 million as city officials sold $88 million worth of bonds Monday. The savings allow Hutto to advance several projects, including the purchase of its water system from Heart of Texas Water Suppliers for $59 million.
“We performed well as a team,” City Manager Odis Jones said. “Our timing was right and we save the city about $3 million in interest.”
The reason for that, said city financial advisor Dan Wegmiller, managing director of Specialized Public Finance Inc. in Austin, is the city’s strong Standard & Poor's AA- rating, which is in the upper echelon of 11 ratings between AAA and BBB.
Other factors Wegmiller pointed to include:
• Creditworthiness of the city
• Adequate economy with access to a broad metropolitan area
• Strong management
• Strong budgetary management
• Very strong liquidity
• Strong institutional framework
“It’s a great rating to take into a tough market,” Wegmiller said, touting a 3.86 percent interest rate when the numbers were expected to come in at about 4.05 percent.
The bonds and opportunity to own the water system were a win-win, Jones said.
“Water is the liquid gold,” he said. “You have to control your water. We will save about $200 million over the term [of the former contract].
Multiple double-digit increases in water rates changed with the purchase of the system. Earlier this year, Jones said the 50-year water contract was “one of the worst in Texas.”