PRESENTER: Presenter
Jessica Williams, Chief Financial Officer (NBU)
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SUBJECT: Title
Discuss and consider approval of an Ordinance Authorizing the Issuance of “City of New Braunfels, Texas, Utility System Revenue and Refunding Bonds, Series 2026”; Pledging the Net Revenues of the City’s Waterworks, Sanitary Sewer and Electric Light and Power Systems to the Payment of the Principal of and Interest on Said Bonds; Enacting Provisions Incident and Related to the Issuance, Payment, Security, Sale and Delivery of Said Bonds; Establishing Procedures for the Sale and Delivery of Said Bonds; Delegating Matters Relating to the Sale and Issuance of Said Bonds to Authorized City and Systems Officials and Providing an Effective Date.
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DEPARTMENT: NBU
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COUNCIL DISTRICTS IMPACTED: All
BACKGROUND INFORMATION:
During May 15, 2025, Budget Workshop, staff presented a financing plan that included issuing up to $215.1 million in bonds for Fiscal Year 2026 capital projects and continuing the commercial paper program to maintain liquidity and funding flexibility. The Board subsequently approved the FY 2026 Budget and Five-Year Financial Plan through FY 2030 at its June 26, 2025, meeting, including the planned debt issuances.
Staff have since determined that refunding outstanding commercial paper notes with long-term debt will restore commercial paper capacity needed to support planned FY 2026 expenditures. With several major projects underway, staff recommend proceeding with the Series 2026 bond issuance.
The proposed issuance includes:
• Up to $90 million for potential refunding of the Series 2015, Series 2016, and Series 2018 bonds, and refunding of up to $75 million of commercial paper notes.
• $175 million to fully fund the NBU Headquarters project in a single issuance, avoiding multiple future financings.
• Up to $15 million for reserve funding and capitalized interest, if needed.
Refunding the commercial paper notes is consistent with NBU Financial Policy, which provides for conversion of commercial paper to long-term debt when authorized capacity is substantially utilized. This action also replenishes commercial paper capacity for future needs.
The Board, at its April 30, 2026, Board Meeting, authorized NBU staff, financial advisor and bond counsel to begin the bond offering process and preparation of documents relating to the issuance of up to $355.1 million in revenue bonds.
Because the City is a qualified issuer under Texas Government Code Chapter 1371, City Council may delegate final pricing authority within established parameters. Section 1207.007 also permits delegation of the refunding component. This approach allows the City and NBU to respond efficiently to market conditions without requiring additional Board or City Council meetings at the time of pricing. NBU has successfully used this process in prior bond issuances.
Proposed Parameters:
1. Maximum principal amount: $355,145,000
2. Final maturity: No later than July 1, 2060
3. Maximum interest rate: 6.0%
4. Minimum refunding savings: 2.0% net present value
ISSUE:
The Board, at its April 30, 2026, Board Meeting, authorized NBU staff to proceed with the necessary steps for the issuance of up to $355.1 million in revenue bonds.
STRATEGIC PLAN REFERENCE:
☐Economic Mobility ☐Enhanced Connectivity ☐Community Identity
☐Organizational Excellence ☒Community Well-Being ☐N/A
FISCAL IMPACT:
There is no direct impact to the City of New Braunfels from the issuance of the bonds described above.
Recommendation
RECOMMENDATION:
NBU staff recommends approval of the ordinance.