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FELPS board approves $9.5M bond
WILLIAM J. GIBBS JR. —
Robert Henderson of RBC Capital Markets addresses the Floresville Electric Light & Power System board of trustees at its July 30 meeting.
Pending approval from the Floresville City Council, the Floresville Electric Light & Power System (FELPS) is poised to sell $9.5 million in bonds by fall 2014. The FELPS board of trustees, at its July 30 meeting, unanimously approved the debt issue.
The city council’s approval is vital to the bond sale because Floresville is the utility’s managing partner, owning 64 percent of FELPS. Resolutions of support also will be sought from the owner cities of Stockdale and Poth; each holds an 18-percent interest.
Among the items to be funded by the bond, along with $2.1 million FELPS will allocate from its anticipated revenue, will be the assessment and preparation of a new FELPS office complex. The system has outgrown its current downtown Floresville headquarters. Dicke said the current proposal is to relocate line crews, construction, dispatch, and warehouse functions to the meter shop located near the junction of U.S. 181 and U.S. 181 Business south of Floresville. Buildings located behind the FELPS offices at the corner of Fourth and C streets would be demolished to pave the way for a new office building. The current FELPS office building, which previously had been an icehouse, subsequently would be demolished.
Other items to be funded by the bond include:
•A system and coordination study
•Upgrade of Enterprise Resource Planning System including Futura
•Supervisory Control and Data Acquisition, or SCADA, system, and other substation security upgrades
•Assessment and preparation of a new FELPS office complex
•Transportation fleet modernization
•GIS mapping of FELPS’ entire system.
According to FELPS General Manager Kyle Dicke, the original plan was to seek an $11.5 million bond, which would have been the utility’s largest-ever single debt issue. However, he said, any bank-qualified municipal bonds totaling more than $10 million are subject to a higher interest rate. Floresville’s $150,000 to $200,000 in outstanding lease-purchase contracts also meant FELPS could borrow a maximum of $9.8 million.
As part of its approval of the bond sale, the board authorized RBC Capital Markets to act as the financial advisor while Fulbright & Jaworski will serve as bond counsel. The bonds will be underwritten by Frost Bank and SAMCO Capital Markets with Bracewell & Giuliani serving as the underwriters’ counsel.
Also approved for September is the refunding of FELPS’ Series 2002 bonds. According to financial advisor Robert Henderson of RBC Capital Markets, this could save the system an estimated $258,856. Additional savings could be realized in spring 2015 when FELPS makes the last payment on its Series 1999 bonds and by the refunding of its Series 2005 bonds in early 2015.
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