Financing Woodlands Township Capital 2010-2014 Bonds

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The Woodlands Township Executive Committee voted today to send a bond proposal strategy for a long-term debt management plan to the Woodlands Township Board, for consideration at the July 22nd meeting.

The Township five-year plan will include a number of projects requiring long-term financing. The proposed construction of a new office facility for The Woodlands Township operations is purposely not included in this list, but does not indicate that the project will be neglected in the plan. The project planning and review of facility options and alternatives is still underway and financing options will be considered at a later date.The plan is to reduce the cost of financing Township projects in this time of low cost money, and does not address the 21 million debt of the Economic Development Zones (EDZ) 1-3, which funded the construction of Town Green Park and partially funded the construction of Market Street, among others. These debts are addressed in separate funding programs.

Construction projects in the plan and the refinancing of existing debt include:

Bond Proposal for financing major capital projects in five year plan	Amount $mm
Total estimated Capital Budget 2010-2014	47.6
Refinance TWA and WFD debts	8.0
Refinance WFD Station #6 and Fire Training Facility debts	11.6
Construct Creekside Fire Station	3.4
Construct Indian Springs Fire Station	3.7
Reconstruct Grogans Mill Central Fire Station	6.4
Purchase fire trucks and equipment for new stations	2.5
Construct new parks and pathways in five year plan (Creekside and Town Center)	12.0

The most viable financing option requiring long-term financing, with voter approval, is the issuance of General Obligation bonds (“GO bonds”). GO bonds are backed by the issuing party and carry an irrevocable commitment - the authorizing body (Township) will levy a property tax sufficient to fund the annual debt service requirements for the life of the issued bonds. This enables large projects to be carried for many years, committing but reducing the immediate tax impact of the projects.

GO bonds are typically tax-exempt bonds issued for a period of 20 years or less. They are rated by national rating agencies and are eligible for municipal bond insurance. Considering the Township’s large property tax base and the relatively low outstanding debt, The Woodlands Township should receive a favorable rating and qualify for municipal bond insurance.

Projects and refinancing will be discussed as part of the 2010 budget and five year plan. The first 2010 Budget Workshop is scheduled for 9 a.m. Wednesday, July 29, 2009, and the plan will be presented at the Town Hall Meeting on July 29, 2009. The final decision on the debt management plan will be considered by the Board in late August.