DALLAS — The Brenham City Council meets in a special session this morning to decide whether to retain First Southwest Co. as financial adviser or switch to a new company headed by a former First Southwest executive.

Last week, six senior managers left First Southwest to form their own financial-advisory firm, Specialized Public Finance Inc.

Garry Kimball will head the new firm, which plans to cater to mid-sized municipalities and special districts across the Lone Star state. He’s been Brenham’s financial adviser since the mid-1990s and was senior vice president at Dallas-based First Southwest for 15 years.

The exodus came just ahead of the company’s merger with PlainsCapital Corp. that was announced earlier this week.

Privately held PlainsCapital in an equity-swap transaction agreed to acquire First Southwest, which since 2004 has ranked as the third-busiest financial adviser in the country, assisting in more than 2,800 issues worth $97.3 billion.

Brenham plans to bring $6 million of certificates of obligation to market as early as next week. Proceeds will fund a new water tower on the west side of the town, which is roughly half way between Austin and Houston in central Texas. Brenham’s population of about 15,000 is up about 11% since the start of the decade.

The city expects to issue about $15 million of GO debt early next year to finance its share of expansion and improvements to U.S. Highway 290.

In July, Standard & Poor’s upgraded the city’s underlying credit rating two notches to A-plus from A-minus, citing a “steady financial performance” over the past four years and a “very stong” fiscal 2007 general-fund balance.

Analysts also said the higher rating reflects Brenham’s “position as the principal commercial center of Washington County, its diverse mix of general fund revenue sources, and a moderate debt burden.”

The city is home to the headquarters of Blue Bell Creameries and Del Sol Food Co.

Fitch Ratings rates the city’s GO debt at A and revised its outlook to positive from stable in August. Analysts said then that the outlook revision was due to the significant improvement in general fund performance and “a demonstrated shift towards strong financial management practices, including the preparation of multi-year projections. “

The unreserved general-fund balance of $2.25 million at the end of fiscal 2007 represents 23% of expenditures and is up from 5% for fiscal 2004, according to Fitch.

Prior to the upcoming sale, Brenham has about $8.2 million of general obligation bonds outstanding and $31 million of outstanding COs. 

 

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