The Pecan Glen Road District in Washington County should soon receive the proceeds from the road improvement bond election passed by voters in May.
Washington County Commissioners on Tuesday approved an order authorizing the issuance of up to $950,000 in bonds to improve roads in the Pecan Glen subdivision. Garry Kimball, Managing Director for Specialized Public Finance, said he expects the deal for the bonds to close on September 28th.
Kimball explained that favorable market conditions led to higher net proceeds from the bonds and a lower-than-expected interest rate.
According to Kimball, the initial target for bond proceeds was $758,000 with an interest rate not to exceed 3.75 percent. Instead, the proceeds came in at $801,069.15 with a 20-year fixed rate of 2.89 percent. Expenses associated with the $950,000 total include $88,325 in issuance costs, a $31,552.60 deposit to the Capitalized Interest Fund and an underwriter’s discount of $29,053.25. The assessed value for all properties within the boundaries of the road district was just under $14 million.
The order approved on Tuesday also authorized the levying of a first-year ad valorem tax rate of 15 cents per $100 valuation on residents of the subdivision, along with other matters supporting the bonds. The tax is specific to residents who live within the boundaries of the road district.
Kimball said the tax rate also fell below target expectations, as the rate was initially projected at 17.5 cents per $100, and voters were told to expect a maximum rate of 24 cents per $100 when the election was called. He said the estimate for year two of debt service and thereafter was first projected near 51.5 cents per $100, but now expects it will be closer to 46 cents per $100.
Kimball said this was the ideal time to come to market with these bonds.
The bonds will be used to bring the private roads in the district up to current county specifications so that they may eventually be taken in as county roads. Commissioner Kirk Hanath said it is the road district’s obligation to improve the roads, so the county will not be using its own resources to do so. County Engineer Ross McCall said these roads will follow the same acceptance procedure into the county system as any other road.
Kimball said the bond documents require the separation of Pecan Glen Road District money from general county funds, so a project fund and interest and sinking (I&S) fund will be set up specifically for the road district.
The tax rate for the road district will be adopted when commissioners adopt the county’s tax rate on Tuesday, September 14th.