Mexico is one step closer to saving more than $3 million in interest on its bond debt after the Mexico City Council on Monday voted to issue refunding revenue bonds.

This bond issuance is part of the city’s plan to refinance bond debt associated with wastewater system improvements from 2010 and 2011. Refinancing will save the city roughly $1.4 million of the $8.75 million principal balance, and slightly more than $3 million in interest payments.

“Both bond issues are [renewable] at their face value, without any penalty for prepayment,” CIty Manager Bruce Slagle said. “With the bond market as it is right now, providing favorable rates for refunding and certainly combined with our reaffirmation of our ’A’ rating from Standard and Poor’s, right now is a great opportunity for us to look at this and refinancing.”

The refunding sale will not exceed $8.1 million in sewerage system refunding revenue bonds.

“We started looking at the possibility of a refund in 2017,” Todd Goffoy said, the city’s financial adviser and managing director with Piper Sandler and Co.

Tax laws at the time, the city could have done an advanced refunding ahead of the renewal date, he said. Changes to the federal tax code took away that possibility Jan. 1, 2018.

“Waiting has been to your benefit,” Goffoy said. “I think the savings are probably four times what the savings were back in 2017.”

Bonds will start to be sold 10 a.m. Thursday. Bids will come in electronically, he said.

BUDGET DISCUSSION FOLLOW-UP

There were three items on which the city council had to make a decision following a city budget work session July 29.

The first was the property tax rate for the city. The city has received final assessment information from the county so it can formulate its tax levy.

“The valuations remain the same, so we are down about $3.5 million from where we were at,” Slagle said. “When you turn around and apply the tax rates through the state formula for revenue neutral, it does adjust the rate slightly.”

The city expects to increase the levy 1.5 cents. Despite the levy increase, it produces less revenue, Slagle said.

“This is assuming 100% collection,” he said.

The proposed tax rate will go from $0.7272 per $100 assessed value to $0.7422.

A public hearing will take place at the next council meeting, which will set the tax levy rate.

Second was the sanitation rates.

The city was trying to not increase rates on customers for the next year. Dayne’s Disposal, which has a 10-year contract with the city, is facing increased landfill costs.

While the city does not have to incorporate the landfill fee costs into rates per the contract, city staff were asked to explore the option of portioning the landfill fee increase into annual increases. If the city does not portion the increase, customers could get hit with $0.64 per month rate increase in 2024 as the city renegotiates solid waste removal contracts.

The sanitation rates also include a $12,000 contribution to Handi-Shop Inc. for its recycling services, which has decreased to cardboard only due to the COVID-19 pandemic and Chinese tariffs.

If the city includes the $12,000 contribution and the half of the landfill fee cost, that means the sanitation rate will increase by 2.81% increase in April.

“Looking at history, last year was 1.73%. We have always tried to stay under 3% the last five years,” Slagle said.

The final question was adjustments to employee income. The proposed budget included no income increases. After applying updated tax rate information, sales tax collections, the city could do a cost-of-living adjustment for staff of 1%.

All three were information items and will be decided at future council meetings.

IN OTHER BUSINESS:

The city conducted emergency repairs on 260 feet of a sewer line in the area of North Olive. The city is reviewing a storm sewer collapse on North Clark near the Mexico-Audrain County Library between Jackson and Monroe streets. Storm sewer lines 300-feet long need repairs. Current repair estimates are $52,000 and the city is looking into options to utilize city staff to help with costs. The city plans to move a $55,000 Fairground pipe replacement project to next year, which frees up those funds for the emergency repair of the storm drains, Slagle said.