Background
Imperial Redevelopment District (the “District”) is a political subdivision of the State of Texas created under Article XVI, Section 59 of the Texas Constitution by House Bill 3554, as passed by the 79th Texas Legislature on June 18, 2005, and operates in accordance with the Special District Local Laws Code, Chapter 8150, and the Texas Water Code, Chapters 49 and 54 and other general statutes applicable to municipal utility districts. The District is located wholly within the corporate boundaries of the City of Sugar Land.
The District is empowered, among other things, to purchase, construct, operate and maintain all works, improvements, facilities and plants necessary for the supply and distribution of water; the collection, transportation, and treatment of wastewater; and the control and diversion of storm water. The District is also empowered to construct thoroughfare, arterial and collector roads and improvements in aid thereof and to establish parks and recreational facilities, including sports and community venues.
The District is required to observe certain requirements of the City of Sugar Land, which, along with Texas law, limit the purposes for which the District may sell bonds for the acquisition, construction, and improvement of facilities and the refunding of outstanding debt obligations; limit the net effective interest rate on such bonds and other terms of such bonds; and require certain public facilities to be designed in accordance with applicable City standards. Construction and operation of the District's system are subject to the regulatory jurisdiction of additional government agencies.
The District presently contains approximately 746 acres of land and is located in eastern Fort Bend County approximately 30 miles southwest of downtown Houston, Texas. Access to the District is provided via the State Highway 6 and US Highway 90A. Generally, the District is bordered on the south by US Highway 90A, on the west by State Highway 6 and on the north by Voss Road. The District lies within the corporate boundaries of the City of Sugar Land. The District is being developed as Imperial, a mixed use community which includes single-family and multi-family residential, retail, office and commercial development, the Imperial Market which is a mixed use lifestyle center being redeveloped upon the former, historic Imperial Sugar Company refinery site, and the Atlantic League baseball stadium known as Constellation Field which is the home of the Sugar Land Skeeters. Development of Imperial began in 2010. The District currently includes approximately 139 developed acres of single-family residential development (464 lots). As of August 1, 2017, the district contained 170 single-family homes completed and occupied, 5 single-family homes completed and not occupied, and 57 single-family homes in various stages of construction. In addition to the single-family development, the district contains approximately 27 acres of baseball stadium facilities, approximately 14 acres of multi-family development, approximately 2 acre of commercial development, approximately 18 acres of corporate office and parking, approximately 45 acres of trails, parks and open spaces, approximately 164 developable acres that have not been provided with water distribution, wastewater collection and storm drainage facilities, and approximately 337 acres which are undevelopable (ponds, drainage easements, right-of-ways, plant sites, detention areas and drill sites).
The Bonds- Use of Funds
The Bonds, which are obligations of the District and not obligations of the State of Texas, Fort Bend County, the City of Sugar Land, Texas, or any other political entity other than the District, will be secured by a continuing, direct, annual ad valorem tax levied, without legal limitation as to rate or amount, on all taxable property within the District. The ultimate security for payment of the principal of and interest on the Bonds depends on the ability of the District to collect from the property owners within the District all taxes levied against the property, or in the event of foreclosure, on the value of the taxable property with respect to taxes levied by the District and by other taxing authorities. The District approved the Official Statement on August 17, 2017 and the bond sale is planned for October 19, 2017, pending council approval.
Proceeds from the bonds will be used to retire the 2017 BAN and pay for a portion of the construction costs associated with Imperial Lift Station #1, 16-inch water line extension, Geotechnical, survey and design fees, and land costs. Additionally, a portion of the proceeds will be used to pay certain non-construction costs associated with the sale of the bonds.
Tax Increment Reinvestment Zone (TIRZ) #3
By Ordinance No. 1667, dated December 18, 2007, the City created the Reinvestment Zone Number Three, City of Sugar Land (the “TIRZ”) and adopted the Final Project Plan and Reinvestment Zone Financing Plan (the “TIRZ Plan”) for a term of thirty years. By Ordinances No. 1888, dated February 5, 2013, and No. 2064 dated August 16, 2016 (all ordinances collectively referred to as the “TIRZ Ordinances”), the City extended the term of the TIRZ for five years to 2042 and amended the TIRZ Plan. The TIRZ covers approximately 839.4 acres and the boundaries of the TIRZ are almost contiguous with the land within the District. The TIRZ is intended to facilitate a program of public improvements to allow the development within the District: a planned mixed use community with single family residential, a hotel/conference center, recreational facilities, a sports stadium, museums and other arts and entertainment venues, land, associated parking, related water, sewer, drainage and road infrastructure, and the preservation and/or reuse of certain historic structures at the Imperial Sugar site.
The City and the County have agreed to deposit to a special tax increment fund established by the City (the “Tax Increment Fund”) a portion of their tax collections arising from the TIRZ. The District has entered into a contract with the board of directors of the TIRZ and the governing body of the City that provides for the District to assist in implementing the TIRZ Plan. Under the contract, the District issues bonds payable from amounts it receives from the City from the Tax Increment Fund (the “Contract Revenue Bonds”) and uses proceeds of the Contract Revenue Bonds to finance certain components of the TIRZ Plan, with the remaining components of the Plan being financed through proceeds of the District’s unlimited tax bonds.
The District has previously issued one series of Unlimited Tax Road Bonds in the principal amount of $12,135,000, all of which is outstanding as of August 31, 2017, and one series of Contract Revenue Bonds in the principal amount of $4,980,000 on September 29, 2016, all of which is outstanding as of August 31, 2017.
Recommendation
Finance staff evaluated the proposed bond issue and it meets the requirements identified in the Third Amendment to the Imperial Redevelopment Agreement. It has level payments through 2042 with an average annual debt service payment of $875,211. The City has no obligation to assume or repay the bonds.
Staff recommends that City Council approve the issuance of $2,500,000 in Imperial Redevelopment District Unlimited Tax Bonds Series 2017.