DALLAS -- Houston Controller George Greanias has agreed to sign off on a restructuring of $450 million of general obligation debt.
"All of our concerns have been addressed. We are happy with the numbers," Maryann Young, a spokeswoman for Mr. Greanias, said yesterday. "If we get back what we sent to the [bond] lawyers, there shouldn't be any problem."
The controller has criticized the plan's present-value savings, and aides say he remains philosophically opposed to balancing the fiscal 1993 budget by restructuring the city's double-A rated debt.
But he decided to support the issue after his staff completed a legal and financial review of the deal this week, they said.
"He just didn't feel we had enough details," said an aide. "Now we feel we have chosen the best alternative that accomplishes the city council's goals."
A team led by Goldman, Sachs & Co. is expected to price the negotiated underwriting next week. City officials met with rating analysts in New York City on Monday to discuss the deal.
Analysts yesterday said they were still discussing the transaction, but city officials have said they do not expect the restructuring to jeopardize the double-A ratings from Moody's Investors Service and Standard & Poor's Corp.
Still, the deal will be a sharp departure from past debt-issuing practices by Houston, which has nearly $1.1 billion of GO debt outstanding. Traditionally, the city has retired up to 74% of its debt in the first 10 years. The plan advocated by Mayor Robert Lanier will lower the average payout into the 50% range, on par with other major U.S. cities.
The offering was originally expected to be sold this week. But sources said privately it was critical that Mr. Greanias's support be secured before the city prepared to market the bonds.
The controller had not threatened to withhold his legally required signature from the GO deal, but last month he did balk at agreeing to issuance of $17.7 million in variable-rate GO bonds to pay legal claims against the city.
His resistance forced the Houston City Council to go the court seeking a judge's order to force his signature. The matter was recently settled, though the planned bond sale was effectively blocked.
"No one wanted a repeat of that," said one source. "If George still had questions, we would still be waiting."
The refunding is designed to restructure city debt and free an estimated $35 million now needed for debt servie payments in fiscal 1993, which begins July 1. Mr. Lanier has estimated the city faces a $70 million deficit next year.
Mr. Greanias had raised concerns that the deal offered too little economic benefit to the city. The refunding, first outlined in May, offers net present-value savings of barely 1%, and the city's usual savings target is 4%.
The controller has criticized the plan, saying it would ultimately increase the cost of debt service by $146 million over the life of the bonds, while providing savings during the first five years of the transaction.
"We still remain opposed to the issuance of debt to cover operating costs," Ms. Young said.