The hiring of Dallas-based First Southwest Co. was approved during the April 30 meeting of the City Council. During discussion on the matter, City Treasurer Cynthia Barr explained that the evaluation committee – comprised of two council representatives and four staff members – recommended the firm to help the city with strategic financial planning, analysis of market conditions, recommendations for investments from bond proceeds, and recommendations for financing or capital projects.

Subsequent to the meeting, City Manager Rebecca Waldman said the main impetus for the hiring was a plan to issue municipal debt in order to finance street and sewer improvements. She declined to reveal the possible size of the issuance, saying the process was still in its nascent stage.

“We have a capital improvements plan for the next two years at about $2 million,” she said. But she added the figure was not set in stone: “That’s subject to change, and we’ll be re-evaluating that this summer.”

The issuance of debt for the city would be something of a milestone, representing the first time in more than 60 years such a measure has been taken in Alamo Heights, Waldman said. While declining to predict the likely date for such an issuance, she said it would have to be done in the near future to finance the needed infrastructure work.

“The city of Alamo Heights hasn’t issued debt since 1946 when they built a swimming pool,” she said of the public recreational facility built 61 years ago. “But we have some rather expensive projects that come to mind.”

Waldman said the segments of the city being eyed for improvements are located throughout the municipality, and some even have been assigned master plans. However, the need for overall improvements would be assessed through a thorough appraisal of city streets, she added.

“We’re going to do a street inventory in the next couple of months to prioritize street projects,” the city manager said.

Cities often issue debt in order to finance needed projects, from infrastructure needs like road repair to bricks-and-mortar construction of government buildings. Because the city has not had an issuance in quite some time, there are no readily available municipal bond ratings on past debt. Many dynamics are taken into account in assigning a bond rating — which investors use as a gauge of credit risk – including the state of the local economy and demographic factors. The latter bodes well for the city, given a median household income of $79,206 – greater than the Bexar county median of $46,337, according to U.S. census data. The city has also seen consistent increases to its general fund, which was at about $6 million in 2005.

In its Comprehensive Annual Financial Report for the 2005, financial analysts predicted the need for a future debt issuance, noting the city’s conservative policy toward incurring debt and the non-existence of any long-term debt. “To avoid long-term debt, the city has allocated substantial funds each year for infrastructure improvements,” the report read. “The city complex, water and sewer infrastructure repairs and the water storage tower, however, are significantly higher in cost than other improvements that have been handled as ‘pay-as-you-go’ expenditures. It is therefore likely that the city will incur debt in the upcoming year.”

The report noted a few risks for the city, including exposure to natural disasters such as the 1998 flood which ravaged city streets. A subsequent application for Federal Emergency Management assistance accounted for 75 percent of the cost to the damage.

First Southwest bills itself as “…one of the country’s preeminent financial advisory and investment banking firms,” according to its Web site, lauding its 60-year history in public finance. The company claims to be the nation’s second-largest financial advisor based on the total number of bond issues, with more than $220 billion in par amount municipal obligations. It lists 1,600 clients served by its 22 offices.