Fort Bend County Municipal Utility District #137 is wholly incorporated within the City limits. It is one of four Municipal Utility Districts serving the Telfair development, collectively consisting of approximately 2,018 acres of land.
The residential component of the District is primarily 1,470 single family homes on 487 acres with homes within the District ranging in price from approximately $275,000 to $795,000. The estimated population of the District is 5,093. Commercial development accounts for approximately 25 acres, which includes 19 acres that has been developed as Telfair West Business District. A two-story medical office has been constructed on approximately 1 acre. In addition, approximately 5 acres have been developed where an Acura auto dealership is under construction. There are an additional 26 acres of developable commercial property that have not yet been fully provided with water distribution, wastewater collection and storm drainage facilities. Approximately 202 acres are non-developable.
The District is proposing to issue the third installment out of $53,100,000 unlimited tax refunding bonds approved by the voters of the district. The District’s proposed bond issuance of $6,765,000 complies with applicable articles of Chapter 5 of the City’s Code of Ordinances.
Proceeds of the Bonds will be used to pay certain costs incurred in connection with the issuance of the Bonds and to advance refund $6,595,000 of the Outstanding Bonds in order to achieve net savings in the District’s annual debt service expense.
In accordance with the City’s policy on MUDs, the proposed issue does not extend the District’s repayment schedule. Preliminary debt service schedules show an average annual debt service requirement of $2,241,749, with a maximum debt service requirement of $2,637,813. The proposed issue matures in 2034.
The District previously sold $36,800,000 principal amount of unlimited tax bonds for water, sewer, and drainage facilities in seven series and $18,945,000 principal amount of unlimited tax refunding bonds in two series. The District has a total of $29,270,000 principal amount of unlimited tax bonds outstanding to date, including this issue.
The tax rate required to pay the average annual debt service at a 95% collection rate based on 2017 Certified Assessed Values is $0.36. If no further development occurs, the maximum debt service payment would require a tax rate of $0.42 based on 2017 values. The district adopted a 2017 total tax rate of $0.415, with $0.175 for maintenance and $0.240 for debt service, so if necessary they could shift some maintenance and operations funds to pay debt service requirements.
These bonds are obligations of the District only and are not obligations of the City of Sugar Land, Fort Bend County, or the State of Texas. City approval of MUD issuances is required to help protect residents of the districts through monitoring the districts’ compliance with City policies that are designed to limit the total tax burden over time of residents in in-city municipal utility districts.
As such, staff recommends Council approval of the proposed issue of $6,765,000 Unlimited Tax Refunding Bonds, which the District plans to sell on December 21, 2017.