DALLAS — The Lone Star state capital of Austin plans to issue about $113.4 million of general obligation debt competitively Thursday to fund numerous projects.
The city will offer about $76 million of public-improvement bonds, $26.7 million of public-property finance contractual obligations, and $10.7 million of certificates of obligation.
Public Financial Management Inc. is the financial adviser to the growing city. McCall, Parkhurst & Horton LLP is bond counsel.
In late January, Standard & Poor’s raised Austin’s GO debt to AAA and analysts assigned the gilt-edged rating to this week’s issue. The upgrade was “based on the likelihood the city’s employment base and fiscal policies should allow it to maintain its strong financial condition even during moderate economic fluctuations.”
Austin is the largest city in Texas with the highest-possible credit rating. The Dallas suburbs of Irving and Plano also carry natural triple-A ratings.
Austin’s estimated 2008 population of nearly 740,000 reflects an increase of about 18% since the start of the decade. Officials project a fiscal 2009 taxable-assessed value of $76.46 billion, which represents 11% growth from the prior year and is more than double the $35.6 billion in 2000.
Fitch Ratings assigned an underlying rating of AA-plus to the sale and affirmed the rating on the city’s $743.9 million of GOs outstanding. The rating reflects the city’s sizeable and diverse economy, solid financial profile, moderate debt burden, and manageable capital needs.
Analysts said while the city isn’t immune to recent slowdowns in housing, employment, sales-tax revenue, and other indicators, the “stable presence of state government and higher education will act as an economic buffer for the Austin area as they have in past economic downturns.”
Fitch also said another credit factor is the demands of a growing population amid “an environment of escalating core-service costs and slowing revenue growth.”
In additional to being the state capital, Austin is home to the University of Texas’ main campus with its nearly 51,000 students.
Moody’s Investors Service rates the city’s GO debt at Aa1.
Proceeds from the certificates will finance a new fire station at the 1,800-acre Avery Ranch development that has more than 4,000 homes. Proceeds also will pay for regular maintenance to the city’s Barton Springs pool.
Funds from the public-property finance contractual obligations will be used for improvements to the water and wastewater system; upgrades to some communications-technology equipment; acquisition of public-works vehicles; and new equipment for the solid waste department.
The bonds are being issued as part of the city’s street-improvement plan outlined in a 2000 bond package. The city issues about $15 million annually from the $150 million authorization and will complete the program with another sale next year with the final installment in 2010, according to treasurer Art Alfaro.
Additional proceeds from the bonds will go toward a variety of projects, including about $8 million for the city’s affordable-housing program that provides mortgages and home-financing help to low-income families.
Following this week’s sale, Austin will have about $468.8 million of authorized but unissued GO debt with no plans to come back to market before next fall.
