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May 20, 2019:

Tollroads Show Strongest Growth in Total Revenue Growth


Municipal Bond Sector Revenue Growth

Municipal Revenue Growth Percent Change 2012 to 2017 by sector

Tollroads Edge Hospitals for the Municipal Bond Credit Sector Revenue Honors

Tollroad and Hospital Sectors easily led all other municipal bond credit sectors when it came to annual total revenue growth over the recent five year period spanning 2012 through 2017.

Tollroads saw a median increase of 30.4%, barely edging out hospitals (systems and independent obligors), which grew by 29.8%.

The slowest growing sector belonged to the wholesale electric sector, which only saw a five year bump of 4.3%. The wholesale electric group, also frequently referred to as public power authority joint action agencies, has been showing positive margins as their missions are often limited to the large generating power plants that they financed.

The credit sector summary analysis comparing the growth in total revenues to total expenses from 2012 to 2017 was compiled by Merritt Research Services, LLC using audited reports from approximately 10,000 municipal bond borrowers.


The Tollroad sector was the clear leader among the major municipal credit sectors.  Its total revenue pace was about double that of its total expenses during the period from 2012 to 2017. The strong revenue growth experienced by the sector doesn’t mean that every municipal bond tollroad borrower raised more than it took in every year; but, the vast majority has been doing that lately. For Fiscal Year 2017, 75% of all tollroads reporting a five year trend showed positive net income.

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Featured Bond: City of Austin – $464 Million in Electric Utility System Revenue Bonds

City of Austin, Texas

City of Austin, Texas

Featured Bond – Week of May 20, 2019: City of Austin, Texas $464 Million in Electric Utility System Revenue Bonds


The City of Austin, Texas is issuing $464 million in Electric Utility System Revenue Bonds through negotiated sale. The pricing date is Wednesday, May 22, 2019. The bonds are being used to improve and extend the current Electric Utility System, Austin Energy, through the acquisition of Nacogdoches Power, LLC, and pay the transaction fees and bond costs of the issuance.

The bonds are rated Aa3, AA, and AA, by Moody’s, S&P, and Fitch, respectively.  Outlooks from all three rating agencies Moody’s, S&P, and Fitch are stable.

About The Bonds & Austin Energy

The City of Austin has seen a 25% increase in population over the last ten years and is still projected to grow. Austin Energy is a municipally-owned electric company that serves the City of Austin and surrounding areas. 50% of the service area is in the City of Austin and the other 50% is outside the City. Because of this growth in the area population, the service area of Austin Energy is also growing.

For the full article with a statistical snapshot of financial measures, click here.


The First Circuit Court of Appeals Ruling on ‘Assured’ Should be Reheard or Reversed; Recent Ruling Sends a Harsh Message to Municipal Bond Market

“Puerto Rico’s ‘Assured’ Decision Should be Reconsidered or Reversed” by James Spiotto( )

Why the Municipal Bond Market Expects Pledged Special Revenues to be Timely Paid to Bondholders in a Chapter 9 Proceeding.  And, Why the First  Circuit’s Assured Ruling in Puerto Rico’s PROMESA Title III Proceeding Should Be Reheard or  Reconsidered on Appeal.

Update on “Puerto Rico’s ‘Assured’ Decision Should be Reconsidered or Reversed” (Feb 05, 2018)

by James Spiotto

On March 26, 2019, The United States First Circuit Court of Appeals ruled on the Appeal from the Title III adjustment of debt proceeding for the Commonwealth of Puerto Rico.  The First Circuit affirmed the ruling of the District Court dismissing the Amended Complaint of Assured Guaranty Corporation (“Assured”) and held that special revenues pledged to revenue bondholders are only exempt from the automatic stay (preventing creditor enforcement action for payments to bondholders) if the municipality voluntarily pays the special revenues to the bondholders, and that such timely payments are not mandatory in Title III or purportedly a Chapter 9 proceeding.

MuniNet previously has described the well-established justification of timely payments of special revenues pledged to bondholders in Title III and Chapter 9 proceedings and why the district court rulings should have been reversed in an article last year.  (Link “Puerto Rico’s Assured Decision Should Be Reconsidered or Reversed” February 5, 2018, James E. Spiotto.)

The First Circuit in ruling on this appeal saw no reason to write at length justifying this ruling, which was contrary to all prior case law precedent by courts hearing Chapter 9 cases, the recognized commentaries on special revenues and the legislative history for the 1988 Amendments to the Federal Bankruptcy Code 11 U.S.C. § 101 et seq. (“Bankruptcy Code”) which added Sections 902, 922(d), 927 and 928, among other provisions, into the Bankruptcy Code.  These sections were interpreted by the First Circuit in its opinion.

  1. The First Circuit in Its Opinion Attempted to Reason to Answer the Following Questions:


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Worried About Public Pensions? Counties Often Have Lower Burdens

Counties Often Underappreciated Despite Generally Improving Fund Balances and Lower Debt and Pension Liabilities

By Richard A. Ciccarone

County governments are generally a good place to start your search for governments with positive financial conditions as well as lower pension and debt liabilities.  Since the Great Recession and Credit Crisis, counties have shown improving general fund balances,  lower debt and better pension funding ratios.   These strengths often get overlooked by public finance critics as well as anxious municipal bond investors that are rightfully concerned about the potential retirement burdens impacting many states and cities.

General Fund Balance Trend

One of the best measures to assess operating reserves is to take a look at the general fund balance in comparison to annual expenditures.  For fiscal year 2017,  the median general fund balance to expenditures was 38.9% based on a sample of  1,107 U.S. counties by Merritt Research Services, LLC,  an independent municipal bond data and research company.  As shown in the table below,  the total fund balance ratio is about 10% higher in 2017 than it was in 2009.  based on Comprehensive Annual Financial Report audits collected by Merritt Research.

county fund balance trend

National median and trend of County Fund Balances to Expenditures; Source: Merritt Research Services, LLC

Available Fund Balance

The portion of the fund balances that is available for future spending and reserves is defined by the Governmental Accounting Standards Board as the assigned or unassigned fund balance.  The assigned designation refers to balances that are legally designated by statute, resolution or indenture while the unassigned refers to the portion that is totally uncommitted.   Converted into a narrower fund balance ratio,  this figure is also running on a positive high note.

Most counties have a comfortable margin, providing them with reserves and room to maneuver as evidenced by ….

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