RR governing body considers extending utility bonding cycle

RIO RANCHO — The Rio Rancho Governing Body considered extending the issuance of $25 million in utility revenue bonds after fluctuations in the economy prevented the city from selling bonds sooner.

City staffers recommended the six-member body approve an ordinance to extend its utility revenue bonding cycle 120 days to give officials a new window of time to sell the bonds, which were previously approved by councilors in October.

"Unfortunately, the market wasn't right, and our 120 days ran out, so we're asking for reauthorization," Stephanie Yara, director of financial services for the city of Rio Rancho, told councilors and Mayor Gregg Hull.

Yara said she is unsure when or if the city will sell the first tranche of revenue bonds, but the city has target dates based on the advice of its bond counsel, which is not employed by Rio Rancho.

The bonds would help pay for some major water and wastewater projects outlined in a $233 million capital plan, she said. 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. 

What's more, Yara said, the proposed ordinance calls on the city to refund previous bonds and loans related to water utilities "if conditions are right." The strategy would save taxpayers approximately $2 million, she said.

"These (refunds) would follow the same maturities as the original debt, so we wouldn't be extending our debt service out any further. It would not require any rate increase," Yara said. "All of these bonds would be accommodated within the current rate structure of the utilities service."

The new bonds are estimated to be at an interest rate of 3.5%, which "is a pretty good rate," Yara said. 

Following her presentation, Hull thanked Yara, City Manager Matt Geisel and staff, crediting them for their "hard work," the city's bond rating, and the sound financial position Rio Rancho is in. Those factors, Hull said, are what allow the city to refinance existing debt. 

"What makes me happy is when we can save the taxpayers between $1.5 million and $2 million in interest," the mayor said, adding this is not the first time the city has refinanced. "This is probably the most qualified staff the city has ever had."

Later, Yara said the city appreciates the support of the governing body and the fiscally responsible policies it has maintained.