DALLAS — Houston is preparing to issue $1.5 billion of combined utility system revenue bonds in a deal coming to market soon after the city's second annual investor conference.
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Scores of bond-industry professionals are expected at the investor conference March 3 and 4, with the bond sale planned for the March 5 and 6, said Ronald Green, controller for the city.
The bonds are coming in two tranches, with one tax-exempt and the other taxable. Siebert Brandford & Shank is senior manager on the tax-exempt tranche, and JP Morgan is senior manager on the taxable bonds.
"It's a fairly large deal," Green said of the upcoming refunding. "But we think there will be a good appetite for the bonds."
As the nation's fourth-largest city and the hub of the energy industry, Houston is experiencing growing interest in its debt offerings, along with a rapidly growing population, according to Green.
"On our days of pricing, we're getting more and more questions from investors," he said. "So, we're trying to anticipate those."
Houston has taken an aggressive approach to providing financial transparency and disclosure through its investor-relations website, a rarity among cities in Texas.
Information on the site, which debuted in September, includes annual and monthly financial reports, the budget and capital improvement plan, a detailed breakout of the city's outstanding debt by credit, recent bond transactions, press clippings, video interviews, ordinances governing bonds, and transcripts from panels and conferences.
Green, an attorney and former member of the City Council, was elected controller in 2009, succeeding Annise Parker when she was elected as mayor.
After his re-election in 2011, Green recognized the increased interest in the city's finances as it led the recovery from recession.
"The idea of an investor relations site came about after our first, and very successful, investor conference in March 2013," he said. "We had over 100 in attendance, and there was great interest in the information presented by the various departments.
"Clearly, Houston is hot in the muni bond market," Green said, "so it just seemed appropriate to have this addition to our controller's office website where stakeholders, including current and potential bondholders, can get a good overview of the city."
With more than $10 billion of publicly financed projects underway or on the drawing boards in the Houston metro area, there will be a lot to talk about.
Those who attend the investor conference will hear remarks from Parker, Green and officials representing the Harris County government, the Harris County Houston Sports Authority, the Metropolitan Transit Authority of Harris County, the Houston Combined Utility System, the Houston Airport System and the Houston First Corp.
The conference includes a tour of a Houston water treatment plant and Hobby Airport, which is expanding to accommodate international flights by primary tenant Southwest Airlines in 2016. Most of the $156 million project is funded by Southwest, but the city is expected to provide about $55 million for related development.
Bob Montgomery, vice president for airport affairs at Southwest, told The Bond Buyer's Texas Public Finance Conference this month that the work at Hobby represents a trend in which the carrier is financing more airport improvements. Southwest is nearing completion of a $500 million terminal remodeling project at Dallas Love Field Airport.
"There was one citizen of Houston that was not happy about our plans at Hobby," Montgomery said. "That citizen was United Airlines."
United, the dominant carrier at the larger Bush Intercontinental Airport, fought a Houston City Council decision to allow Southwest to fly to Mexico and Latin America from Hobby.
United has its own terminal remodeling project at Bush Intercontinental. The new South Concourse is the first of a three-phase Terminal B redevelopment that is projected to span the next seven to 10 years and cost $1 billion.
Elsewhere, Houston and Harris County are making up for lost time with expansion of the Metro light-rail system that is celebrating the 10th anniversary of its inaugural 7.5-mile line through downtown.
Since the line began operations in time for Houston's first Super Bowl in 2004, nearly $4 billion in public-private development has sprung up along the route.
"The development that occurred after light rail was built and the development that is happening today, shows growth and promise of a downtown that's better connected and more walkable," said Tom Lambert, Metro's interim president.
By 2017, the next time Houston hosts a Super Bowl, Metro Rail expects to have about 10 more miles of light-rail operating. The expansion is expected to be funded primarily through $900 million of Federal Transportation Administration grants.
Meanwhile, coming up the Houston Ship Channel are $2 billion of projects over the next decade, according to Port of Houston chief financial officer Tom Heidt.
Capital spending over the next three years will total $726 million, he said, much of it to upgrade existing docks that need maintenance.
The port is ranked first in the United States in foreign waterborne tonnage, first in U.S. imports, first in U.S. export tonnage and second in the U.S. in total tonnage.
"The Port of Houston is not slowing down," Heidt told The Bond Buyer's Texas Public Finance Conference on Feb. 4. "We are building up and maintaining what we have."
Linking the port to the surface transportation system will be new connections to the proposed Interstate 69, which is moving northward from near the Mexican border.
The new Interstate will connect with the 184-mile loop around the outer metro area known as Grand Parkway.
So far, $2.9 billion of bond money has been invested in the loop through the Grand Parkway Transportation Corp., which was created by the Texas Department of Transportation.
The project's total cost is estimated at more than $6 billion.
As TxDOT continues supervision of the Grand Parkway, Harris County is continuing to expand its toll roads through the Harris County Toll Road Authority. The HCTRA manages 103 miles of toll roads, with connections to the Grand Parkway planned.
To bring more people into town for business and conventions, the city created an organization called the Houston First Corp.
The group combines the previous Convention and Entertainment Facilities Department and the Houston Convention Center Hotel Corp.
Houston First manages the George R. Brown Convention Center, where the investor conference will be held, and which recently completed an $11 million renovation of the adjoining Hilton Americas Hotel that opened in 2003.
The HFC has $463 million of debt outstanding and is planning a second convention hotel that is expected to break ground in April.
The 1,000-room Marriott Marquis on the north end of the convention center is expected to open in 2016, according to Brenda Bazan, chief financial officer for Houston First.
Houston-based Rida Development Corp. and Los Angeles-based Ares Management LLC said they have financing for the $335 million hotel project from a six-bank consortium.
Houston First's role in the financing includes acquisition of the hotel site, construction of an adjacent parking garage and other improvements to the convention district.
"When the Marriott Marquis opens its doors in 2016, it will increase the hotel room capacity in downtown Houston by 20% and will give the George R. Brown Convention Center tandem hotels bookended at each end of our building," said Dawn Ullrich, chief executive of Houston First.
"This will make our city exponentially more attractive to the largest and most prestigious conferences and trade shows in the world," Ullrich said.
