Rio Rancho sells bonds for water/wastewater facilities improvements

RIO RANCHO — The city of Rio Rancho sold $25 million in utility revenue bonds Tuesday, almost two weeks after the Rio Rancho Governing Body voted to extend the sale.

The developments were shared by City Manager Matt Geisel during his report to the council.

“Interesting time to be in the bond market,” Geisel said during the meeting. “All that said, it was still a rather favorable transaction for us.”

But the city was not able to achieve the $2 millions in savings it had hoped by refunding utility bonds and loans, saving only $1.2 million at a 3.6% interest rate, Geisel said. The interest rate on the new issuance of the bonds is 3.8%, he said.

“Fortunately, our bond rating (is) very helpful in this moment, but a good outcome and (Utilities) Director (Steve) Gallegos is already excited to put the money to good use for our utilities system,” Geisel said. 

His comments came after the council considered an ordinance in February to extend the potential sale of the bonds — which would help pay for water/wastewater utility projects — out 120 days. City staff had recommended the extension after the city was unable to sell the bonds during the previous cycle because of unsatisfactory market conditions. The council approved the ordinance  March 12. 

The revenue bond sale was made after the city established targeted dates to sell them based on the advice of its bond counsel, which is not employed by Rio Rancho, Geisel said.

The bonds would help pay for some major water and wastewater projects outlined in a $233 million capital plan, said Stephanie Yara, director of financial services for the city of Rio Rancho. If approved, the plan would provide a bonding cycle that allows for two utility revenue bondings — at $25 million each, over the next five years — to help pay for those projects, including potentially the second phase upgrade of the city's wastewater treatment plant.