District Background
Burney Road Municipal Utility District (the “District”) is a political subdivision of the State of Texas created by order of the Texas Commission on Environmental Quality (TCEQ) dated September 26, 1984. The District contains approximately 445.7 acres of land. The District is located within the corporate limits of the City of Sugar Land, Texas and obtains water, sewer, and drainage service from the City. The District is bounded on the west by Burney Road and on the north by Florence Road. West Airport Boulevard traverses the central portion of the District.
The District has a 2019 Assessed Valuation of $356,733,813.00. The City provides a rebate in the amount of 50% of city property taxes paid from properties within the District annually. The District has an average value of $301,550.00 for its 1,183 single-family homes.
The District has a 2019 tax rate of $0.22 with $0.18 for debt service and $0.04 for maintenance and operations.
Bond History
The District's voters have authorized the issuance of a total of $25,000,000.00 unlimited tax bonds for the construction of waterworks, wastewater, and drainage facilities, and could authorize additional amounts. As of the date hereof, $11,185,000.00 unlimited tax bonds remain authorized but unissued for such purpose.
The District has $7,725,000.00 in principal payments for outstanding debt. After the refunding, $2,685,000.00 in principal remains outstanding in addition to the 2020 refunding bonds, which are estimated at $4,940,000.00. The actual principal amount depends on market conditions at the time of the refunding bond sale.
Proposed Bond Issue
Proceeds from the Bonds will be used to refinance $5,040,000.00 of the District’s currently callable 2021-2026 maturities from the outstanding Series 2007, Series 2011, and Series 2012 bonds, and to pay costs of issuance. The issuance is a straight refunding with the goal of achieving debt service savings. These bonds are not an obligation of the City of Sugar Land and will be repaid by the District’s taxpayers.
The District’s financial advisor provided a refunding analysis to City staff as of February 19th that shows an estimated net present value savings of $234,370.00 over 7 years or 4.31% of refunded bonds. The District's board has approved the transaction as a parameter sale with a minimum savings parameter of 3.5% of the refunded principal. The transaction will not move forward unless it meets that savings threshold.
The estimated debt service schedule for the refunding bond issue shows interest payments in 2020 with principal payments in 2021 and continuing through 2028. After the refunding, the District’s estimated average annual debt service requirement is $1,128,652.00 for 2020-2028. The District’s estimated maximum annual debt service requirement is $1,135,570.00 in 2026.
Action Requested
The District is requesting the City Council approval of the proposed refunding issue for Burney Road MUD. The District anticipates issuing the refunding bonds in April 2020, depending on market conditions.