(The Center Square) – Shreveport City Council members agreed Thursday to refinance $190 million worth of water and sewer bonds in a bid to save on long-term debt costs and boost the city’s ability to upgrade its systems.
The council’s 5-0 vote occurred during a special meeting the week after credit rating agency Moody’s downgraded the city’s bond ratings. Moody’s also issued a “negative” outlook, saying the city’s finances are becoming less flexible and that it lacks a solid plan to generate revenue.
Another credit rating agency, Standard & Poor’s, maintained its ratings for the city’s bonds but revised its financial outlook from “stable” to “negative.”
The ratings can affect borrowing costs and interest payments for government projects. Shreveport Mayor Tom Arceneaux has said that refinancing the revenue bonds should help improve the city’s next bond ratings.
Mike Busada, the city’s bond attorney, told the council the refinancing will save the city around $8 million, “depending on what the market looks like the day we go out for sale.”
He said the refinancing won’t be affected by the bond rating downgrade.
“This is just one other step to help address the concerns, by saving money and being prudent and making sure we get all the cost savings we can,” Busada said.
Tom Dark, the city’s chief administrative officer, said the refinancing “means a tiny bit less need for revenue.”
“If at some point we ask you for rate increases, it might be a little smaller than if you haven’t done this,” he told the council.
Arceneaux has said other steps are needed to improve the city’s bond ratings, including becoming “more aggressive” in maintaining and increasing its reserve funds.
He said he’s begun discussions to renegotiate terms of a 2014 federal consent decree that mandated $342 million in sewer system upgrades to comply with the Clean Water Act.
The city has spent hundreds of millions of dollars trying to comply, which has affected its ability to maintain solid bond ratings, he said.
