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San Angelo City Council held a special meeting to consider approving seeking bids for $2 million in short term financing. The term of the notes would be one year. City Council approved the matter by a 7-0 vote. Not one Council member asked about the costs of issuance.
This is concerning as the City paid back a similar $2 million short term note on August 15th. The vast majority of those funds were sold as shelter renovation financing.
That note cost nearly $100,000 in issuance fees and interest. City staff said not one invoice related to shelter renovations was paid from those borrowings. So how did the city utilize those funds prior to paying them back? It is a mystery.
Update 9-18-23: City staff will ask City Council for approval to issue a series of short term bonds in tomorrow's Council meeting. That discussion will be worth watching.
Update 12-2-25: City Council heard a new direction for Animal Shelter facility improvements for dogs. It involves building pods with indoor/outdoor areas. The city may be able to build three or four pods with the original $2 million borrowing that was paid back over two years ago. With serious, professional Shelter management in place, this plan has a chance of coming to life.
The creative financial genius behind the short term borrowings attended his last City Council meeting. Assistant City Manager Michael Dane conducted an arbitrage, investing bond proceeds for return. The bond return that threw the city over IRS rules ended up being water and sewer bonds. The question is whether returns from the ST borrowings sat below water/sewer bonds in the profit stack. Dane is retiring with no word on his future plans, if any.
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