The Rio Rancho City Council on Thursday took a step towards authorizing up to $63.4 million in water and wastewater system bonds to fund critical utility infrastructure improvements and refinance existing debt, a move officials said will save ratepayers up to $2 million in interest costs over 20 years.
The council unanimously approved the bond ordinance on first reading during its Feb. 12 meeting, setting the stage for $25 million in new infrastructure projects and the refinancing of approximately $32 million in existing bonds and loans if approved after a second reading.
“Because of your hard work and the financial position that the city’s in right now and our bond ratings being upgraded, we’re able to refinance some old existing debt here,” Mayor Gregg Hull told city staff. “When we can save the taxpayers between one half and $2 million in interest … it reflects on the quality team that we have here in the city.”
The bonds, which are expected to carry an interest rate of 3.5% to 4%, will not require a rate increase for utility customers. All debt payments will be funded through existing water and wastewater system revenues, according to Finance Director Stephanie Yara.
The $25 million in new infrastructure bonds will help fund portions of the city’s five-year, $233 million Capital Improvement Plan for water utilities. According to planning documents, priority projects include:
- A booster station and transmission line at Well 17 ($7 million)
- Waterline installations and replacements ($41.4 million)
- Northern Boulevard and North Hills waterline replacement ($5.9 million)
- Wastewater lift station improvements ($20.3 million)
- Treatment plant expansions and upgrades ($66.6 million)
The refinancing portion will target the city’s 2015 water and wastewater revenue bonds and two New Mexico Finance Authority loans from 2016. The original bonds were approved in November but market conditions prevented their sale within the required 120-day window, necessitating Thursday’s reauthorization.
“The market wasn’t right, and our 120 days ran out, so we’re asking for reauthorization,” Yara said. “The refundings would follow the same maturities as the original debt. So we wouldn’t be extending our debt service out any further.”
The council also received the city’s fiscal year 2025 audit report, which showed no findings for the fourth consecutive year. Farley Vener, president of Hinkle + Landers LLC, the city’s auditing firm, presented the results.
“We engaged and gave you an audit opinion,” Vener said. “Your financials were clean … the city is in compliance with your federal monies.”
The clean audit marks a continuation of the city’s strong financial management, which has earned it Government Finance Officers Association budget awards and improved bond ratings in recent years.
The bond ordinance requires a second reading before final approval. The council indicated it plans to move forward with both competitive and negotiated sale options for the bonds, with final terms to be determined by the mayor, city manager and finance director.
Hull emphasized the significance of the city’s fiscal responsibility to residents.
“When we look at this particular deal, when we go to issue bonds, there is nobody out there … that is more critical and probing on city budgetary, city resources, credibility than the bonding agencies,” Hull said. “They want to make sure that their investors are protected, and that the risk is minimal.”
The council meets next on Feb. 26. Early voting for city elections is underway through Feb. 28 at the Broadmoor Senior Center. Six other voting locations throughout Rio Rancho open Saturday ahead of the March 3 election.