DALLAS — The El Paso City Council gave preliminary approval Tuesday to a $63 million issue of certificates of obligation for a variety of capital projects.
Proceeds will be used to fund several capital programs that have been approved by the council over the past four years, including technology upgrades, acquisition of land for fire stations, flood control efforts, and park projects.
Tuesday's action will allow the west Texas city to publish a notice of intent for the negotiated sale, which must occur at least 30 days before the debt can be issued.
The debt will be issued in October, with the council scheduled to approve the sale Oct. 16.
RBC Capital Markets is the lead underwriter on the El Paso issue. Managers include Siebert Brandford Shank & Co. Inc. and Merrill Lynch, Pierce, Fenner & Smith.
Fulbright & Jaworksi LLP is bond counsel. First Southwest Co. is the city's financial advisor.
The certificates are supported by property tax revenue but issuing the certificates does not require voter approval. Sun Metro Transit, El Paso's public transportation agency, will support the $12 million of the debt is earmarked for transportation facilities.
The proceeds will provide $2.4 million to purchase a building in downtown El Paso to house some city departments after City Hall is razed in early 2013 to provide space for a bond-financed minor league baseball stadium.
Renovating the building is expected to cost $10 million, which is not included in the sale.
The city will ask voters in November to raise the hotel tax by 2% to 17.5%, the highest rate in Texas, to support $15 million of tax-exempt bonds and $35 million of taxable debt for the public-private stadium project.
The October sale does not includes proceeds from proposed annual issues to finance a $220 million street infrastructure improvement plan approved by the council in May.
The city plans to issue $21.8 million of the street debt in 2013 through 2017, with a final $109 million issue in 2018.
The council in June amended its debt-management policy to eliminate a sales cap of $100 million a year of certificates of obligation.
The council originally planned to include the street program in the 2012 bond referendum. However, it was decided to limit the GO bond package to "quality of life" projects such as museums and parks, and to regard street maintenance and upgrades as an on-going effort.
El Paso voters will decide in November on a $473.3 million general obligation bond referendum that includes $245 million for park and zoo projects and $223.3 million for a downtown multi-purpose event center as well as library and museum upgrades.
El Paso's credit is rated AA by Standard & Poor's and Fitch Ratings, and Aa2 by Moody's Investors Service. The city's outstanding debt includes approximately $600 million of GO debt and $217 million of certificates of obligation.