DALLAS — Bexar County plans to issue $332.7 million of bonds and certificates of obligation used to finance improvements for sports arenas and tourism attractions in San Antonio.
The county commissioners were scheduled to approve the bond proposal on Dec. 9.
The bonds carry ratings of A1 from Moody's Investors Service and A-plus from Fitch Ratings. While Fitch maintains a stable outlook, Moody's has split its outlooks based on the revenue streams.
The outlook on bonds backed by rental car taxes is stable, while the view on those backed by a combined venue tax is negative.
"The negative outlook on the CVT bonds reflects adequate but improved debt service coverage that is pressured given possible debt issuance plans over the near to medium term," Moody's analyst Adebola Kushimo wrote in her Dec. 3 report.
The two taxes were first approved by voters in 1999 to finance the construction of the AT&T Center, home of the National Basketball Association's San Antonio Spurs. Voters authorized an extension of the 1.75% combined venue tax and 5% rental car tax in 2008 to provide $415 million for new tourism projects.
Projects covered by the bonds include $125 million of San Antonio River projects, $80 million for amateur sports projects, $100 million for rodeo and arena enhancements, and $110 million for cultural arts projects. The four propositions received high voter approval rates ranging from 57% to 75%.
The commissioners' court later revised the plan and funded all San Antonio River projects with flood control COs payable from the county's flood control property tax. The county retains the legal authority to issue venue project revenue bonds to refund these COs although there are no such plans.
The sole remaining venue project is $75 million in improvements to the AT&T Center for which combined venue tax bonds will be issued by 2016. The venue taxes will remain in effect until the final maturity of outstanding and future bonds for the voter-approved bond projects. The use of the venue taxes for additional projects would require voter approval.
The growing county got good news on its general obligation credit on Nov. 18 when Standard & Poor's issued a positive outlook on its AA-plus rating. The improved outlook was based on S&P's new rating criteria.
"The ratings reflect our opinion of the county's strong economy, very strong budgetary flexibility, adequate budgetary performance, very strong liquidity, and strong management practices," said Standard & Poor's credit analyst Lauren Spalten.
With four large military bases located within its boundaries, Bexar County can enjoy a measure of stability unless Congress authorizes another round of base closures. The military bases are also magnets for visitors coming to see family members stationed in the Alamo City area.
"Fitch views such military reliance cautiously, although the county has benefitted substantially from past realignment and base closure decisions," Fitch analyst Jose Acosta noted.
The county's tax base has returned to a steady growth mode after declining modestly in fiscal 2012 due to the steep building downturn and falling base values of the last recession, Acosta said. The tax base grew by 5.7% and 7.5% in fiscal years 2014 and 2015, respectively, mostly due to reappraisal gains. County officials are conservatively projecting modest rates of tax base growth beyond fiscal 2015. About 70% of general fund revenue is derived from ad valorem taxes.
