Travis County Commissioners Court
Tuesday, June 1, 2010,
Item 7
7. Receive briefing and take appropriate action to authorize staff and consultants to move forward with the refinancing of a portion of travis county's outstanding debt obligations, and authorize financial advisor to select underwriting group with whom to negotiate sale. We may have a golden opportunity for us if we want to take advantage of it, is what the backup hinted? I'm lad patillo the financial advisor. As we have done many times in the past, when there's an opportunity to refinance some of your outstanding debt for savings, very similar to refinancing a home to have a lower payment, that we have done that. I believe over the last 20 years, we have probably done about -- about 10 or 12 of these refinancings. And saved quite a bit of money for the taxpayers. This opportunity to refund some bonds that were issued in 2001 and 2002 is a very good opportunities. We have been tracking this with actually the idea and the analysis was brought to me by -- by richard ramirez and troy from first southwest company over on the left and also pardon me on my right, your left, also from paul jack at hinojas, had done it for us last summer, tracking the debt to see when the market moves, when we have opportunities to do this. We waited for the big financing to be over in order to get this done because it would be getting the cart before the horse, sort of, to have the large financing that you just saw last month and to have the refunding prior to it. So this with the -- with what's going on in the marketplace, out there in europe and elsewhere, there's -- there's a lot of people being driven towards safe havens, safety of investment. A flight to quality is what we call it. Travis county bonds are quality. And this -- this triple a bonds like yours, we have an opportunity now to save quite a bit of money over the next 12 years, if we do this refinancing. And this -- in this market environment. Troy ran the numbers again for me just this morning based on friday's numbers, we are somewhere in the range of 150,000 a year in savings for the next 12 years. And the market today. We can't sell it today, probably the earliest that we could go to market would be the 13th. We are here today just to ask for your permission to move forward as a team, your entire team to accomplish this for you.
>> so if we see an opportunity, how do we move quickly?
>> well, the quickest that we could move is on the 13th. Pardon me, the 14th. To sell it and then bring it to you the next day for -- for -- for a bond purchase agreement. If we need to adjust that and do the other technique that i told you about before, we can make that decision between now and then. But if we wanted to use the other technique, meaning issue a parameters resolution, which would give authority, the court would give authority to you if we met parameters, we would have had to have that to you by, you know, in the next couple of days and glen opple said that virtually impossible with all of the paperwork the attorney general requires. What i would like to do right now is move forward, get this done as quickly as we can before july 4th when the market usually gets really kind of -- iffy, and in july if we can get it done this month i recommend we do that. As soon as we can. Because the market is strong.
>> so the market, where the situation is favorable, we try to act.
>> yes.
>> and $150,000 a year sounds like a modest amount looking at one year. Looking at 10 to 12 years, though, you are in excess of savings of a million dollar.
>> yes.
>> this is debt that we already have at a fixed interest rate, we are looking at an opportunity to reduce the interest rate.
>> and reduce your payments.
>> right.
>> mr. Reeferseed has some enlight -- some advise for us.
>> you are so kind. I'm ronnie
>> [inhale] reeferseed saying no more. My only question is really i mean we're all in favor of saving money with the economic chicanery. What i'm wondering is who is the no -- who is the financial advisor, who decides how much that person has paid and is that not a no-bid contract or is that somebody already with the county and the structure of the advisors and all of that --
>> mr. Lad patillo there is the county's financial advisor. He's on contract with us. Has been the financial advisor for contract -- by contract now for numerous years.
>> okay. That's a relationship of long standing.
>> yes, sir.
>> great. All right. Well, just checking -- so there's no bidding on that kind of a thing? Maybe there was years ago when he got the deal or --
>> right.
>> okay.
>> all righty. That's -- that was my main question. Thank you so much.
>> thank you. Questions? We did this once before and it turned out to be favorable. We caught the market right, refinanced, old debt basically to lower interest rate and achieved significant savings long term.
>> yes, sir, actually many times. We probably over the last 10 years saved millions and millions of dollars by refinancing when the opportunities arose.
>> is it true when the market is up and down like it is now is when you really ought to take advantage of the opportunity?
>> well, it's actually when the interest rates are low. Like they are right now. For triple a bonds is the best time to do it. As -- as rodney rhoades and i were looking over the numbers, the coupon that's we are refunding right now are generally anywhere from one and a half to two and a half percent higher than the coupons that we would be issuing to -- to refinance them.
>> questions? It makes so much sense to me-- it's amazing that it's real. But it is.
>> it's real.
>> move approval.
>> second.
>> discussion? All in favor? Show commissioners eckhardt, gomez and yours -- huber and yours truly voting in favor.
>> commissioner davis abstaining because of my son has a direct relationship with the first southwest company and of course i will submit the -- the according documentation to the -- to the -- to our clerk to support my position in this particular agenda item.
>> what we do in situations like this is the firms that put the deal together basically get the contract.
>> they -- the people that bring us -- bring it to us, we have always at least as long as you and i have been working together here, that's the way that we have done it rather than to take someone's idea and shop it around.
>> all right. Thank you.
>> thank you very much, judge.
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Last Modified:
Tuesday, June 1, 2010 2:35 PM
