Featured Bond – Week of September 9th, 2019; City of Austin to Issue $233 million in Capital Improvement and Refunding Bonds
The City of Austin is scheduled to issue $233 million in bonds to finance its debt and to fund in whole or in part several voter-approved capital projects. The bonds are expected to be scheduled for sale on September 10, 2019 with Ramirez & Co., Inc. as the lead underwriter. Bonds in this issuance vary in terms of tax-exemption, type, purpose, and dollar amount. Let’s dig into some details.
About the Bonds
Series 2019 includes Public Improvement and Refunding Bonds ($146 million), Certificates of Obligation ($5 million), and Public Property Finance Contractual Obligations ($25.8 million). Proceeds from this series will refinance a portion of the city’s outstanding General Obligation debt, finance a variety of capital projects including investments in transportation infrastructure, and pay the cost of issuance.
In 2016, Austin voters approved $720 million in bonds to pay for construction projects aimed at enhancing its major transportation corridors, connecting urban trails, and building out the bicycle network. Several intersections have already received overhauls since the ballot passed 3 years ago. Gaps in sidewalks and bike lanes are continuously being filled as well.
Proceeds from the sale of the Contractual Obligations will be used to purchase certain equipment and other personal property for use by various City departments.
Taxable Series 2019 includes Public Improvement Bonds ($40 million) and Certificates of Obligation ($14.9 million). Proceeds from this series will finance in whole or in part capital improvements related to affordable housing and city services, as well as costs of issuance.
Austinites went to the polls again in 2018 to approve the largest affordable housing bond in the city’s history along with a raft of other government services like, parks, libraries, and flood mitigation.
Each series of the Bonds constitute direct obligations of the City, payable from a continuing, direct annual ad valorem tax levied on all taxable property located within the City. The Bonds are considered general obligation securities. The Certificates and the Taxable Certificates are additionally secured by and payable from a limited pledge of the surplus revenue of the City’s solid waste disposal system. The chart below displays the bond ratings from the major ratings agencies:
City Financial Information
The Texas Capitol is the 6th fastest growing city by population in the United States. Austin’s economy is best known for its booming tech sector. Facebook just cut the ribbon on a massive new office expansion in the heart of downtown, a few blocks away from Google. Although Austin has an impressively low unemployment rate of 2.9, the influx of highly paid talent has driven up the cost of living and called into question the prospect of long-term affordability for most citizens.
These details and more on purposes, security, risks and other matters pertaining to these City of Austin bonds can be found in the preliminary official statement, provided by MuniOS. After registering, if needed, visitors can link directly to the official statement by searching for the City of Austin.
Statistical Snapshot of the City of Austin Finances as of September 30, 2018 with Comparison to City Sector FY 2017-2018 medians
Provided above is a quick snapshot of financial characteristics of the City of Austin along with the medians for other retail electric sector issuers of all sizes, courtesy of Merritt Research Services, LLC. Merritt has many of the sector medians publicly available and regularly updated on their Benchmark Central page. (Merritt believes the data to be reliable but does not make any representations as to its accuracy or completeness).
These facts and numbers are for informational purposes, and should not be considered an official disclosure for potential investors. Investors should consult the official statement. None of the information provided should be construed as a recommendation by MuniNet Guide, MuniNet LLC, Merritt Research Services LLC, or any of their employees. Information and analysis is for informational purposes only.