Pre-Council Bond Debt Discussion - August 3, 2026
Pre-Council Bond Debt Discussion
The City Council held a pre-council meeting on August 3, 2026, at 5:00 PM in the Council Chamber to discuss the city's bond debt, outstanding obligations, and credit ratings. The meeting featured presentations from Finance Director Matthew Liu and Municipal Advisor Jim Pritchett of Columbia Cat Capital. No votes were taken; the session was informational.
Discussion Items
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Bond Types Overview: Matthew Liu explained the three main types of bonds used by the city: general obligation (GO) bonds (backed by full faith and credit, require voter approval), revenue bonds (repaid from specific enterprise revenues), and special obligation (SO) bonds (certificates of participation, annual appropriation, may or may not require a vote). Currently, the city has no GO bonds outstanding.
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Outstanding Bond Summary: Liu presented a detailed breakdown of the city’s outstanding debt:
- Governmental accounts: $5.1 million principal in SO bonds, total with interest $5.3 million.
- Business accounts: $55 million principal in SO bonds, $6.5 million interest, total $62 million.
- Revenue bonds: $248 million outstanding, primarily for water, electric, and sewer systems.
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Legal Framework: The Missouri Constitution limits governmental debt to 10–20% of assessed property valuation. GO bonds require mandatory voter approval, while revenue and some SO bonds may not. All city bonds must be sold at public sale, with exceptions for bonds backed by utility revenues, refunding bonds, and direct agency purchases. Liu clarified that private placement occurred for the airport parking refunding when an institution offered a favorable rate before the public sale.
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Individual Bond Details: Liu reviewed each outstanding bond, including purpose, remaining proceeds, and final payment dates:
- Governmental (2016 SO refunding): City Hall construction, final payment March 2028.
- Airport (2020 SO): New terminal, final payment October 2030, interest rate of 1.96% (noted as favorable).
- Parking: Two refunding bonds (2019 and 2020) for Fifth & Walnut and Short Street garages, final payments in 2034 and 2030 respectively.
- Sewer: Multiple bonds including state revolving fund (SRF) loans and revenue bonds, with final payments between 2028 and 2036. Remaining bond authority: $5.7 million.
- Solid Waste (2017 SO): Landfill cell construction, final payment 2037.
- Water & Electric: Several revenue refunding bonds (2014, 2019, 2020, 2015, 2023) with final payments from 2028 to 2053. Remaining bond authority: $29.8 million. The 2015 bond (voter-approved for electric) has $6.7 million unspent, partly used for substation upgrades and planned for transmission line engineering design.
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Credit Ratings Presentation: Jim Pritchett discussed the city’s credit ratings: GO/issuer credit rating at AA, SO bonds at AA-, sewer revenue bonds at AA, water and electric revenue bonds at A+. He compared these to the rating scale, noting all are investment grade. Factors affecting ratings include institutional framework (Hancock Amendment), local economy (University of Missouri presence), management policies (fund balance policy, investment policy), budget performance, fund balance (41% of expenditures), and debt obligations (including pensions). For utility revenue bonds, key metrics are debt service coverage (minimum 1.25x for additional bonds, 1.1x rate covenant) and days cash on hand. Pritchett noted that achieving a AAA rating may not be cost-effective given the small interest rate improvement and constraints like pension liabilities and economic factors.
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Council Questions: Council members asked about:
- The voter approval requirement for airport SO bonds (linked to hotel/motel tax increase).
- Term lengths for bonds (based on asset life and cash flow).
- The impact of retiring bonds on general revenue (funds become available for other uses; no automatic assumption of new debt in forecasting).
- The status of specific water projects (West Ash Pump Station and water treatment plant upgrade to be completed fall 2026; Southeast Pump Station under review for priority).
- The effect of unfunded pension liabilities on credit ratings (identified as a major factor; city funds 100% of actuarially recommended amount annually).
Key Outcomes
- No votes or formal decisions were made. The discussion was purely informational to provide council members with a comprehensive understanding of the city’s debt portfolio, legal constraints, and credit rating considerations.
- Council members expressed intent to use this information for future strategic planning and public communication, particularly regarding bond capacity and revenue sources.
- The meeting adjourned at approximately 5:50 PM to prepare for the regular council meeting at 6:00 PM.
Meeting Transcript
Go ahead and call our um August 3rd, 2026 uh pre-council to order. Uh we have one item on our uh agenda for today, and that's the bond debt discussion. So Matthew Liu, I assume I'm kicking this over to you. Yes. So we're just gonna talk a little bit today about uh our bonding situation, outstanding bonds, uh as well. We have our financial or our mus uh municipal advisor here from Columbia Cat Capital, uh, Mr. Jim Pritchett. Uh so first just uh to go over a few of the different types of bonds we have. Uh we have general obligation bonds. Well, we don't have any of them right now, but these are the type of bonds that that are available for municipality. So we have general obligation bonds, and these are backed by the full faith and credit uh of the city, and they're typically funded by local taxes. So this is a type of bond that usually has to go out for a vote. Um most commonly you see uh property taxes associated with uh uh geo bonds, but they they can be sales taxes as well. The next is revenue bonds. Uh I believe we have this is the category that we have the most of. And these are uh payback strictly by the revenues generated within a specific enterprise or if you have a project. Um and so a good example of these would be our sewer system revenue bonds. And then lastly we have the special obligation bonds or SO bonds, and these are uh basically certificates of participations. Um they are special allocation or tax bonds, and they have annual appropriation uh for the payment of the debt. Here is a uh just a summary of what we have currently. And so uh for governmental, the governmental accounts we have SO bonds, uh about five point one million, uh five point three total with interest. We have some uh SO bonds within our business accounts. Um they total uh fifty-five million in principle, uh six point five in interest for a total of sixty-two million. Uh and then we have some revenue bonds. Um again, this is uh where we have the most of our our bonding authority or our bondings outstanding with a total of two hundred and forty-eight million in revenue bonds. So water electric consumers where those are hit. So a little bit about the legal framework with our bonding authority. Um Missouri constitutional constraints, uh, article six of the constitution government governs uh governmental debt limits and the obligation uh debt usually cannot exceed ten to twenty percent of the city's assessed tageable property valuation. And so this is a good one. I think we talked about this uh the last time we met when we were asking about uh uh debt for the general fund. And so this is where that comes into account. This is what we look at uh when we talk about issuing debt from the general fund. And then you have uh a voter mandate, which it's about 5050 on what needs to go to a vote versus what does not have to go to a vote. Um but in Missouri geo bonds recall require mandatory voter approval. But that's usually in the local arena. Before you go on from that one, Matthew, so does that mean that any so if we have a sp like in the parks department, parks, you know, it has its own special revenue fund, but is it sort of a general, you know what I mean? They're in that. Does that mean like if parks wanted to bond a project but they had a special revenue source, would it have to go to the voters, or what could it be because they're special revenue? If they have a revenue source already, it could be a revenue bond. Okay. Uh but you could also do SO bonds that do not have to go to a vote of the public. Vote of the public usually for geo bonds. Right. They are it it's every time it has to go for a vote of the public. Or if I I think some certain some SO bonds, if there's not, is if there's not a mechanism to pay them back. Yeah, if if they're if it's a voter-approved funding source that is going to pay for it, but generally those would be geo bonds. Okay. Appreciate that. Thank you. And then sort of looking at the constraints at the local level.
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