FIRST & FINAL CONSIDERATION: Consideration of and action on CITY OF SUGAR LAND ORDINANCE NO. 2374: ORDINANCE AUTHORIZING THE ISSUANCE OF CITY OF SUGAR LAND, TEXAS, COMBINATION TAX AND REVENUE CERTIFICATES OF OBLIGATION, SERIES 2025; SETTING CERTAIN PARAMETERS FOR THE CERTIFICATES; AUTHORIZING THE PRICING OFFICER TO APPROVE THE AMOUNT, INTEREST RATE, PRICE, AND TERMS THEREOF; AND CERTAIN OTHER PROCEDURES AND PROVISIONS RELATING THERETO.

Staff recommends the City Council approve Ordinance 2374 authorizing the issuance of City of Sugar Land Combination Tax And Revenue Certificates of Obligation, Series 2025, and Setting Certain Parameters for the Certificates.

The former Imperial Sugar site was the start of what would become Sugar Land as it once played a vital role in the city’s economy. Imperial Sugar created jobs and then homes, and as it grew, this economic engine was the cornerstone of our community – a “company town” – for generations. Today, Sugar Land is still serving as a major employment hub in the Houston region with more than 70,000 jobs. While the factory is no longer operational, the resolve to preserve and honor the City’s history is stronger than ever. It is for this reason that preserving the Char House and redeveloping the Imperial Historic District and its adjacent properties is one of the City Council’s top priorities.

The City has a long history of using a variety of financing tools to maximize our ability to be opportunistic when it comes to delivering high-priority economic development projects within the community, including using COs repaid by other funding sources to maximize the use of public dollars and reducing the overall borrowing costs.  Repayment of this CO issuance will be supported by a combination of restricted economic development funds and hotel occupancy tax.

These funds will be used for restoration of historic structures within the Imperial Historic District, the acquisition of approximately 45 acres, as well as the construction, acquisition and/or improvements to the City’s utility system, streets, and related drainage. Funds will also cover professional services associated with these projects. 

On February 18, 2025 City Council approved Resolution No. 25-15 authorizing the publication of Notice Of Intent To Issue the CO’s. The notice was published in the February 19^th and 26^nd newspapers, with the date on which City Council would authorize the issuance of the COs.

As part of the issuance process, the City engaged Standard & Poor's (S&P) and Fitch to provide a rating on the proposed COs issue. Both Fitch and S&P affirmed the City's AAA rating, which is the highest rating possible and reflects the City's strong financial management practices, healthy reserves, and economic stability. 

The recent tariff concerns are widespread and shared among domestic and global economists.  These market concerns have led to extreme market volatility and the higher than usual uncertainty level has resulted in sometimes dramatic daily swings in the market.  The Parameter Sale is a tool the City can use, if needed, to move the sale date in the short term. For this reason, a Parameter Sale will be used in the COs’ issuance.

Ordinance 2374 authorizes the issuance of City of Sugar Land, Texas, Combination Tax and Revenue Certificates of Obligation, Series 2025; and

• Sets the following parameters for the COs
  • the aggregate par amount of the Certificates issued shall never exceed the aggregate maximum principal amount of $50,000,000
  • the true interest rate on the Certificate shall not exceed 4.75%
• Authorizes the City Manager as the Pricing Officer to act on behalf of the City in selling and delivering the Certificates and carrying out the other procedures specified in this Ordinance   

The issuance date, interest rates, interest payment dates, and maturity will be fully described in the Officer’s Pricing Certificate.