The Smith County Commissioners Court on Tuesday, May 15, voted to approve the sale of road bonds at a lower-than-expected interest rate after receiving a dozen competitive bids.
In November, Smith County voters approved a $39.5 million bond package to improve county roads.
On Monday, Specialized Public Finance Inc. bid general obligation bonds, which will net the county $12 million towards the first phase of the three-year bond package.
Smith County received 12 bids on the bonds, with Fidelity Capital Markets submitting the winning bid at a fixed interest cost of 2.499 percent. The bonds are rated AA+ by Standard & Poor’s Rating Services, which is equivalent to that of the United States federal government.
Smith County Judge Nathaniel Moran said 12 bids is extremely high.
“That is a result of the financial strength of the county, and the financial planning we’ve done,” he said. “The lower than expected rate will result in significant savings to the county.”
The bonds are anticipated to increase the I&S portion of the tax rate by 0.7 cents per $100 valuation.
The bonds are planned to be issued in three parts over the next three years.
Paul Jasin, managing director for Specialized Public Finance Inc., gave a brief presentation to the Commissioners Court, and said the tax base growth came in higher than expected, while the interest rate came in lower than they anticipated.
The bids ranged from 2.49 percent, won by Fidelity Capital Markets, to 2.68 percent.
Jasin recommended that the court award the General Obligation Bonds Series 2018 to Fidelity Capital Markets. The court voted unanimously to follow his recommendation, with the exception of Commissioner JoAnn Hampton, who was not in court Tuesday.
“I am really proud of the sale, the way it went,” Commissioner Jeff Warr said. “These bids show that major firms are very interested in investing in Smith County.”
Commissioner Terry Phillips said the “great rate will save the tax payers a lot of money and will put the county further down the road in road improvements.”
Commissioner Cary Nix agreed.
“I’m very pleased with the interest rate,” Nix said. “It actually came in lower than we expected. That’s good news for the tax payers. Now we just go to work.”
The bonds will have a project fund deposit of $12 million, and closing on the financing is set for June 12. That means the county will receive the bond proceeds into the construction fund next month.
In January, the Smith County Road and Bridge Department began repairing and overlaying several county roads, after the Commissioners Court approved a resolution expressing official intent to reimburse costs of projects for the smith county road bond. Doing so allowed the county to borrow money from itself to start on the road projects, and reimburse those bond expenditures after the bonds are sold.
More than five miles of road overlays have been completed since January on County Roads 119, 113, 152, and 121, near Bullard, as part of the road and bridge bond program.
Roadwork is currently underway on CR 420, in far west Smith County. County Road 437 is also expected to be overlaid in May; and five miles of paving is expected in June, with major road construction projects planned throughout the year.
Last week, Smith County commissioners unveiled road signs to be placed during construction at all road projects paid for with bond funds.
Judge Moran said he was pleased the sale of the bonds happened to occur during National Infrastructure Week.
“Smith County’s recent passing of a $39.5 million road bond fits in perfectly with this year’s Time to Build initiative, being celebrated across the country during National Infrastructure Week,” Smith County Commissioner JoAnn Hampton said. “The bond funding is allowing Smith County to rebuild one of the most important pieces of infrastructure throughout the county – our roads.”