Fort Bend County Municipal Utility District No. 128 (the “District”) is a municipal utility district created by order of the Texas Commission on Environmental Quality (the “Commission” or “TCEQ”), dated January 17, 2006, and operates under the provisions of Chapters 49 and 54 of the Texas Water Code and other general statutes applicable to municipal utility districts. The District is located wholly within the exclusive extraterritorial jurisdiction (ETJ) of the City of Sugar Land, Texas with the exception of approximately 67 acres of undevelopable land located within the corporate limits of the City of Sugar Land.
This district has some unique characteristics and history that have altered the City’s approach to review and approval of their bond issues. The following history is provided for your reference.
District Annexation History:
Event
|
Order Approved |
Acred
Added
|
District Acreage |
Creation of MUD 128
|
1/17/2006 |
|
670.72 |
Annexation-Part of MUD 127
|
8/23/2010 |
33.15 |
703.87 |
Annexation-Part of MUD 127 & 126 |
5/23/2011 |
184.19 |
888.06 |
Annexation-Rest of MUD 127 |
9/24/2012 |
304.94 |
1,193.00 |
Annexation-Rest of MUD 126
|
2/24/2014 |
575.00 |
1,768.00 |
The proposed issue meets the requirements set forth in City Policy 5000-03.
District representatives worked with City staff to ensure that the City is comfortable with the proposed issue prior to submitting the application to TCEQ, due to the length of time that the TCEQ process takes. Proceeds for the proposed issue of $17.45 million for Series 2017, will be used to retire 2017 Bond Anticipation Notes (BAN’s) prior to maturity, as well as reimburse various developers for funds advanced on behalf of the district for construction and engineering of water, wastewater, and/or drainage improvements. Staff has reviewed the Preliminary Official Statement and recommends that the City approve the issuance as requested.
Development Update & Projections:
The following development updates were included in the POS for each year’s bond issues:
From Preliminary OS: |
2014 |
2015 |
2016 |
2017 |
Completed & Occupied |
557 |
1,069 |
1,612 |
2,015 |
Under Construction |
306 |
278 |
285 |
261 |
Completed but not Occupied |
6 |
12 |
14 |
9 |
Vacant Lots/Lots Under Construction |
|
|
679 |
561 |
Multi Family Units |
Under
Construction
|
249 |
249 |
249 |
Multi Family Units Under Construction |
|
|
|
351 |
Commercial |
3 |
6 |
8 |
10 |
Developable Acres Remaining |
920 |
565 |
422 |
285 |
Estimated Population |
2,110 |
4,239 |
6,140 |
7,550 |
-
Projected build out: 570 future homes (2 homes per acre x 285 developable acres)
- Total build out = 3,434 homes
Assessed Value
-
2017 Taxable Assessed Valuation $1,309.3 million
- Estimated 2017 AV at 7/1/17: $1,482.9 million
TCEQ Financial Feasibility Rules
The district is subject to TCEQ review and approval of proposed bond issues and must meet very stringent financial feasibility rules before the commission will approve a proposed issuance. This issue is pending TCEQ approval, and the final amount may be lower than the proposed $17.45 million. The district will advise the City of the final amount.
With LID #15 serving the district and carrying a tax rate of $0.73 for 2016, the district is limited on increases to its tax rate based on existing values and projections to stay within the $1.50 total combined tax rate under TCEQ rules. Issuance of future debt will need to be coordinated with future growth to manage within this limitation. The 2016 tax rate for the district is $0.70 with $0.58 for debt service and $0.12 for maintenance & operations.
Proposed Bond Issue
Proceeds from the Bonds will be used to retire a $11.05M Bond Anticipation Note that matures March 29, 2018, and reimburse the Developers for funds advanced on behalf of the District for:
(1) construction and engineering of water, wastewater and/or drainage improvements to serve
(a) Avalon at Riverstone Sections 15B, 16 and 21 through 24A;
(b) East Avalon Drive Phase II
(c) Riverstone North Sections 4 through 7
(d) The Villas at Riverstone
(e) Reclaimed water line
(f) Sanitary sewer improvements along University Blvd
(g) LJ Parkway Phase 8
(2) Construction and engineering of Tertiary Water Treatment Plant Phase I
(3) Construction engineering and land costs of Lift Station No. 7
(4) Water and wastewater plant connection fees
Bond proceeds will also be used to pay developer interest, and to pay certain costs associated with the issuance of Bond and the 2017 BAN.
Debt Service Schedule
The estimated debt service schedule for the bond issue shows principal and interest payments beginning in 2018. The district is not extending the current maturity schedule, which runs through 2040.
The estimated average annual debt service requirement on the Bonds is $5,048,411. The estimated maximum annual debt service requirement on the Bonds is $5,980,956. Details of the debt service can be found in the attached memo.
Action Requested
At this time the District is requesting City Council approval of the proposed debt issue, which they plan to sell on or about August 29, 2017. The District’s Financial Advisor, First Southwest, a Division of Hilltop Securities, will be available to answer questions regarding the proposed issue.