Strong credit rating helps Hutto save millions at bond sale

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.”
By Joe Warner
Joe Warner is executive editor of Community Impact Newspaper. He previously served as managing editor for Central Texas and senior editor of the flagship Round Rock, Pflugerville and Hutto newspaper. He came to Central Texas from Metro Detroit, where he was editor and general manager of several daily and weekly publications. He is the former president of the Michigan Press Association and was on the MPA board of directors for nine years.