The county of Fort Bend, Texas, issued almost $134 million in bonds to develop its public transportation network.
The bonds were issued in three series. The county sold $81 million in unlimited tax road bonds, $20 million in a tax anticipation note, and $33 million in certificates of obligation. The unlimited tax road bonds mature between 2024 and 2053, with yields between 3.03% and 3.97%. The tax anticipation note matures on March 1, 2024 and yields 3.44%. It has a coupon rate of 5%. The certificates of obligation mature between 2024 and 2043, with yields between 3.03% and 3.79%.
The bonds received a rating of Aa1 from Moody’s Investors Service and AA+ from Fitch Ratings.
The rating reflects “the county’s ample revenue-raising authority; solid expenditure flexibility; and ample reserve levels, which should allow it to maintain superior gap-closing capacity throughout economic cycles,” according to Fitch.
The issuance comes amid rapid growth in Fort Bend county, which is located Southwest of Houston. That growth could necessitate a more robust transportation system. The unlimited tax road bonds will finance new highways, roads, bridges, and related drainage systems that serve as connecting links within the county. The tax anticipation note will seek to reverse the county’s cumulative cash flow deficit, and the certificates of obligation will finance infrastructure, parks, and public safety improvements.
The unlimited tax road bonds will be financed by an unlimited levy on the county’s property taxes. The tax anticipation note and certificates of obligation will be financed by a levy limited to $0.80 for every $100 in assessed valuation. The certificates will also be supported by revenue from prisoner housing contracts. Property tax collections are the county’s largest source of revenue.
J.P. Morgan Securities LLC served as lead underwriter on the issuance.