Mesirow Financial Works with the City of Hutto, Texas to Turn a Liability into an Asset
CHICAGO, October 23, 2017 – Mesirow Financial served as senior managing underwriter to the City of Hutto (the “City”) in the City’s acquisition of a private water company. Mesirow Financial’s Public Finance group helped solve the problem of rising water costs, and in doing so, implemented a public acquisition of a private water company.
The City of Hutto, Texas is one of the fastest growing cities in the country. The City’s drinking water was supplied by three wholesale water suppliers, each under long-term contracts with the City. Take-or-pay provisions of one of these contracts led to substantial City rate hikes and the highest water rates in the region. The City renegotiated the contract twice, to no avail.
Amid the rising water costs, recently appointed City Manager Odis Jones immediately tackled the issue. Jones commented, “As the water was flowing in, too much money was flowing out. We needed relief. I reached out for a solution from Mesirow Financial, whose bankers understand public-private partnerships.”
In concert with financial, legal and technical experts engaged by Jones, Mesirow Financial considered contractual relief – options included rate renegotiation, rate buy-downs, or outright purchase of the company holding the contract. Mesirow Financial’s analysis showed numerous City benefits with a purchase of the company or its assets; Jones approached the company, which was willing to sell at a fair price. After a due diligence review of the company's assets, water rights and permits, Jones negotiated a lower acquisition price.
In September, Mesirow Financial successfully priced $80 million Certificates of Obligation Series 2017 bonds for the City of Hutto to fund the purchase. As underwriter, Mesirow Financial underwrote nearly half of the bonds offered due to weak market conditions, ensuring the City achieved the lowest possible interest rates. The City took control of the system on October 12, 2017.
Walter Kulakowski, managing director of Mesirow Financial’s Public Finance group noted, “The acquisition gives the City and its rate payers long-term control of water, rate mitigation, and long-term cost savings."
The City of Hutto is a full-service, home-rule municipality operating under a Council-Manager form of government in Central Texas. Over 25,000 people call the growing community home, making Hutto one of the fastest-growing cities in the nation. People choose Hutto for the ability to have all that a small town life can offer while being 25 minutes from the Texas state capitol. Hutto has recently been recognized as the “Top Place in Texas to Raise a Family,” the “#1 Local City (in the Austin area) for Young Couples,” and “One of the Top 100 Places in Major Markets to Locate a Business. From its rural, agricultural roots to the growing population and commercial developments that are now Hutto, the community has remained centered on its people and the neighborhoods they call home. To learn more, please visit huttotx.gov/.
About Mesirow Financial Public Finance
Mesirow Financial’s Public Finance team has a longstanding tradition of providing unbiased professional service to a diverse group of public sector clients. The team’s regional bankers, located in six major cities across the U.S., maintain the day-to-day relationships with clients and coordinate their specific financial needs. To learn more, please visit mesirowfinancial.com/publicfinance.
About Mesirow Financial
Mesirow Financial is an independent, employee-owned firm founded in 1937. As specialists in investment, risk management and advisory services, we are committed to helping our institutional, corporate and individual clients achieve their objectives. Our professionals are inspired by an entrepreneurial desire to develop tailored solutions designed to deliver measurable results. To learn more, please visit mesirowfinancial.com.