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Home My WebLink AboutPO 6966: City of Port Arthur TX Transaction Summary Final 5 24 21 V2Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved Contacts Transactions Summary Anne Burger Entrekin Regional Managing Director anne.burgerentrekin@hilltopsecurities.com 70 Northeast Loop 410, Suite 710 San Antonio, Texas 78216 Direct:210.308.2200 May 25, 2021 City of Port Arthur, Texas Michael Martin Assistant Vice President michael.martin@hilltopsecurities.com 1201 Elm Street, Suite 3500 Dallas, Texas 75270 Direct:214.859.1731 Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved Rating Update Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved “The rating reflects the city’s: •Strong financial management; •Strong budgetary performance; •Very strong budgetary flexibility; •Very strong liquidity;and •Strong institutional framework score. “We view the city's management as strong,with good financial policies and practices under our FMA methodology…” “Very strong budgetary flexibility,with available fund balance in fiscal 2019 at 36%of operating expenditures” Very strong liquidity,with total government available cash at 82.1%of total governmental-fund expenditures and 8.8x government debt service and access to external liquidity we consider strong” Credit Rating Commentary “We think that Port Arthur’s ability to meet debt service and continue to operate successfully has a strong link to its general creditworthiness...” “A+”/Stable Outlook 2 Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved Certificates of Obligation Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved Bid for Certificates of Obligation, Series 2021 -Aggregate 4 _________________________ (1)The bid from the Underwriters includes a Premium of $5,223,137.Premiums are very common in low interest rate environments and are used as a Project Fund Deposit. FYE 9/30 Principal Interest Total 2022 605,000$ 1,433,303$ 2,038,303$ 2023 2,825,000 1,146,575 3,971,575 2024 895,000 1,053,450 1,948,450 2025 945,000 1,007,200 1,952,200 2026 995,000 958,575 1,953,575 2027 1,045,000 907,575 1,952,575 2028 1,095,000 853,950 1,948,950 2029 1,150,000 797,575 1,947,575 2030 1,210,000 738,325 1,948,325 2031 1,275,000 676,075 1,951,075 2032 1,330,000 617,500 1,947,500 2033 1,385,000 563,000 1,948,000 2034 1,445,000 506,300 1,951,300 2035 1,500,000 447,200 1,947,200 2036 1,560,000 385,600 1,945,600 2037 1,625,000 321,500 1,946,500 2038 1,695,000 254,800 1,949,800 2039 1,760,000 185,500 1,945,500 2040 1,835,000 113,400 1,948,400 2041 1,905,000 38,300 1,943,300 28,080,000$ 13,005,703$ 41,085,703$ City of Port Arthur, Texas $28,080,000 Certificates of Obligation, Series 2021 The bid from the Underwriters results in a True Interest Cost of 2.28% (1) Par Amount 28,080,000$ Premium 5,223,137 Total Sources 33,303,137$ Project Fund Deposit 32,900,000$ Cost of Issuance 170,468 Underwriter's Discount 167,230 Bond Insurance (16 bps)64,985 Deposit to DSF 453 Total Uses 33,303,137$ Sources Uses Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved Projections versus Bid for Consideration Results ▪True Interest Cost is 97 basis points or 30% less than projections ▪Average Annual Debt Service is $68,541 lower than projections ▪Total Debt Service over the life of the COs is $1,370,827 less than projections ▪Deposit to Project Fund is $475,000 more than projections Projected Series 2021 COs(1) Bid for Series 2021 COs Par Amount of Bonds $32,900,000 $28,080,000 Deposit to Project Fund $32,425,000 $32,900,000 True Interest Cost 3.25%2.28% Call Date 2/15/2031 2/15/2030 Total Debt Service $44,199,760 $42,828,933 Projected Debt Service Tax Rate Impact No Impact No Impact 5 ____________ (1)Projections as of March 12, 2021 Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved Series 2021 Certificates of Obligation Results for Ad Valorem and Utility Ad Valorem Supported Utility System Supported Par Amount of Bonds $19,685,000 $8,395,000 Deposit to Project Fund $23,000,000 $9,900,000 True Interest Cost 2.27%2.30% Call Date 2/15/2030 2/15/2030 Projected Total Debt Service $31,047,000 $13,152,760 Actual Total Debt Service $28,536,121 $12,501,737 Difference in Total Debt Service $2,510,879 $651,023 Projected Average Annual Debt Service $1,552,350 $657,638 Actual Average Annual Debt Service $1,426,806 $625,087 Difference in Average Annual Debt Service $125,544 $32,551 6 Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved General Obligation Refunding Bonds Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved Summary of Bonds Refunded 8 Interest Maturity Principal Rate Call Date 2/15/2022 235,000 3.000%6/28/2021 2/15/2023 255,000 3.000%6/28/2021 2/15/2024 270,000 3.500%6/28/2021 2/15/2025 290,000 3.500%6/28/2021 2/15/2026 310,000 3.500%6/28/2021 2/15/2027 330,000 3.500%6/28/2021 1,690,000$ Callable Maturities 2022-2027 Coupons 3.00% - 3.50% Call Date 6/28/2021 Certificates of Obligation, Series 2012 Original Principal $2,230,000 Callable Principal $1,690,000 Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved Debt Service Savings –Refunding Series 2012 CO 9 Date Prior Debt Service Refunding Debt Service Projected Savings 9/30/2022 $316,525 $283,825 $32,700 9/30/2023 300,825 285,875 14,950 9/30/2024 307,275 289,250 18,025 9/30/2025 317,475 301,625 15,850 9/30/2026 326,975 312,750 14,225 9/30/2027 335,775 317,750 18,025 $1,904,850 $1,791,075 $113,775 SAVINGS City of Port Arthur, Texas General Obligation Refunding Bonds, Series 2021 The projections presented to City Council dated 3/3/2021 were as follows: Gross Savings -$77,288 True Interest Cost –1.23% NVP Savings -$76,017 PV Benefit –4.50% Refunding Par Amount $1,530,000 Gross Savings $113,775 Average Annual Savings (2022-2027)$18,963 True Interest Cost 0.81% Net Present Value Savings $110,207 Present Value Benefit (%)6.52% DEBT SERVICE SAVINGS Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved Summary Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved Investors ▪Mass Financial Corp ▪Parametric Portfolio Associates, Inc. ▪Nuveen Advisory Corp ▪Allstate ▪Northern Trust (SMA) ▪Fifth Third Bank ▪16th Amendment Advisors LLC ▪Mackay Shields ▪Belle Haven Investments ▪Simmons First Investment Group ▪Wells Capital ▪WPG Advisors LLC ▪Valley National Bank ▪Aquila Investment Management ▪One Oak Capital Management ▪Texas First Bank ▪Ameriprise Financial Advisors 11 Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved Summary ▪We recommend the City approve the bid from Loop Capital Markets, Raymond James,and Siebert Williams Shank &Co. –Certificates of Obligation o The True Interest Cost of 2.28%is lower than the projected interest rate of 3.25%by 30%or 97 basis points –Refunding Bonds o The Net Present Value Savings are $110,207 as compared to projections of $76,017 ▪We want to express our appreciation to the City Staff,Mr.Burton,Mr.Moore, Ms.Daniel,and Ms.Tizeno in particular,for all their assistance in making this a successful process and transaction ▪Thank the Bond Counsel,Derrick Mitchell with Holland &Knight LLP,for their efforts ▪Thank the Underwriters,Loop Capital Markets,Raymond James,and Siebert Williams Shank &Co.along with their Underwriter’s Counsel,Greenberg Traurig LLP,for their efforts ▪Thank the City for the honor of serving Port Arthur as its Financial Advisor;we appreciate our long-term relationship 12 Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved Market Update Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved Bond Buyer’s Index of 20 Municipal Bonds 14 Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved Bond Buyer’s Index of 20 Municipal Bonds 15 Member FINRA / SIPC / NYSE © 2021 Hilltop Securities Inc. All Rights Reserved MMD Yield Curve 16