DALLAS — The Fort Bend County Toll Road Authority, which feeds suburban traffic to the Harris County toll system in the Houston area, is advance refunding $119 million of debt while continuing its expansion.
The negotiated deal is expected to price this week through Loop Capital Markets and Raymond James | Morgan Keegan.
First Southwest Co. is financial advisor and Allen Boone Humphries Robinson is bond counsel.
This week’s issue will refund nearly all of the 15-year-old toll system’s debt, authorized by voters in 2000. The county issued $61.7 million of unlimited-tax and subordinate-lien toll road revenue bonds in 2003 and $71.2 million in 2004.
As a startup system, the toll bonds carry the county’s general obligation ratings of Aa1 from Moody’s Investors Service and AA-plus from Fitch Ratings with stable outlooks. Standard & Poor’s does not rate the bonds.
With a 2010 population of 585,375, Fort Bend County, southwest of Houston, has seen 65.1% growth in 10 years, making it one of the fastest-growing counties in the nation. Founded in 1837 and named for a blockhouse at a bend of the Brazos River, it has its seat in the town of Richmond, while Sugar Land is its largest city.
The county’s debt is considered low, with only $303.8 million of unlimited-tax bonds and $190.3 million of limited-tax bonds outstanding. However, the overlapping property-tax levies by the fast-growing school district, cities and special districts make the per-capita load higher, according to Fitch.
The county will have local company in the refunding market this week. The Fort Bend County Independent School District is set to price $161.3 million, with BOSC Inc. as book-runner. First Southwest is also financial advisor on that deal.
“At $7,820 per capita or 9.3% of total market value, overall debt levels are very high,” wrote Fitch analyst Gabriela Gutierrez.
She also pointed out that county wealth levels as measured by median household income are well above those of the Houston area, the state and the nation.
The county’s economy continues to expand and diversify, and unemployment is below state and national averages, she added.
In 2006, Fort Bend was listed as the wealthiest county in Texas and the 24th wealthiest in the United States, with a median household income of $75,202, surpassing the Dallas suburbs of Collin and Rockwall counties. However, the Council for Community and Economic Research ranked Fort Bend County as America’s third wealthiest county when the local cost of living was factored into the equation.
Over the last four fiscal years, the county posted general fund balances well in excess of its 15% target, despite spending nearly $70 million in pay-as-you-go capital projects, Gutierrez said.
Annual capital outlay spending averaged nearly 9% of general fund revenues from 2008 to 2011. For the close of fiscal 2011, the county recorded an unrestricted general-fund balance of $44 million, or 21% of spending. Of that amount, $33.1 million is committed for completion of the county’s five-year capital improvement plan general purpose projects.
“For fiscal 2012, the county is experiencing some budgetary pressure due to slower tax base growth compared with prior years’ double-digit growth trend,” Gutierrez said. “Additionally, the county shifted some tax levy from operations and maintenance to debt service on an ongoing basis.”
The adopted budget applies about $9 million in fund balance for capital outlays. Operating expenditures were cut by 2.6%, despite the addition of 44 new positions, primarily for the operation of newly constructed facilities.
As a feeder system for the Harris County Toll Road Authority, Fort Bend County’s toll system is just beginning to sprout.
The four-lane, 6.2-mile Fort Bend Parkway Toll Road connects to HCTRA’s Sam Houston Tollway. Its second project, the 5.5-mile Fort Bend Westpark Tollway, links to HCTRA’s Westpark Tollway. The Fort Bend Parkway Toll Road opened Aug. 30, 2004, and the Fort Bend Westpark Tollway opened on Aug. 10, 2005.
In April, Fort Bend County issued $30 million of senior-lien toll road revenue bonds to finance a two-mile extension of the Fort Bend Parkway and to pay for planning costs for future extension of the Westpark Tollway.
By issuing debt in the names of individual counties, the Houston-area toll system differs from that of the Dallas-Fort Worth region, where the North Texas Tollway Authority represents several member counties and operates as a state agency.
While Fort Bend County is participating in an outer loop around the Houston metro area known as the Grand Parkway, Harris County has chosen not to build any sections of the 170-mile project. The loop has been divided into 11 separate segments for construction and funding. Only two of the 11 segments are complete. As of Dec. 25, 2011, all segments except one were fully funded.
Segment D, the first section opened, runs from just north of Interstate 10 west of Houston south to U.S. 59 in Sugar Land. That segment links to the Westpark Tollway.
The development of toll roads as an alternative to gas tax-funded freeways led to protests in Texas three years ago, but objections have been muted since then. The major target at the time was the proposed Trans-Texas Corridor that would have provided tolled lanes for truckers through what is now privately owned land. Since then, the Texas Department of Transportation has dropped the name of the project and begun developing the new Interstate 69 along existing highways.
With more fuel-efficient vehicles and a weakening economy, federal and state fuel tax revenues fell nationally from a 2007 peak of $72.4 billion to $68.6 billion in 2010.
State toll collections had risen from $4.9 billion in 2000 to $8.9 billion in 2010, according to the Associated Press.
Locally administered tolls increased from $1.6 billion in 2000 to $2.5 billion in 2009.
