Friendswood City Council moved forward with plans to issue $20.4 million in water and sewer system revenue bonds, marking the first major utility debt issuance since 2021.
The bonds will fund critical infrastructure projects identified in the city’s recently adopted utility rate study. John Robuck with RBC Financial Securities told the council the bonds would generate $20.5 million for projects plus $1.4 million for a required reserve fund.
“We are under contract with the city of Houston and other partners for our Southeast water purification plant for water and then the Blackhawk wastewater treatment plant for wastewater,” explained City Manager Morad Kabiri.
The timing of the bond issue comes as the city’s water and sewer working capital has decreased to $143,000 above the required 90-day reserve. Officials noted that utility rates have already been adjusted to accommodate the debt service on the new bonds.
The bonds are expected to be priced in March, with closing scheduled for March 27. Current market conditions indicate an interest rate of approximately 4.35% for the revenue bonds.
