DALLAS — The city of Port Arthur plans to offer $9 million of general obligation bonds competitively Tuesday for upgrades to park and recreation facilities, drainage improvements, and a new fire station.
This is the first issue from a $17 million GO authorization passed by voters in November. The bank-qualified bonds are structured as serials reaching final maturity in 2028. Insurance will be at the bidder’s option.
Joe Morrow, vice president at First Southwest Co., the financial adviser to the city, said he expects the remaining $8 million of the approved bond package to be sold in the first quarter of 2009. Vinson & Elkins LLP is bond counsel.
The taxable-assessed value of Port Arthur has grown by more than 46% the past five years to $1.73 billion for fiscal 2008.
The city carries underlying rating of A2 from Moody’s Investors Service and A from Standard & Poor’s.
In a note ahead of a refunding in late 2006, Standard & Poor’s analysts said the region “is one of the world’s leading refining areas.”
The city’s location, on the west shore of Sabine Lake directly adjacent to the Gulf of Mexico and the Louisiana border, provides an attractive site for petrochemical companies to operate, according to analysts.
Credit strengths include a “substantial economic base that is centered on petrochemicals, steel fabrication, and manufacturing,” a strong financial performance with high reserves, and moderate overall debt, according to analysts.
Below-average income levels, high unemployment rates, and a “very concentrated property-tax base … reliant on the volatile petrochemical industry” mitigate the strengths, the agency said.
Last week, Port of Port Arthur commissioners approved the issuance of up to $50 million of environmental facilities revenue bonds to build a water-treatment plant in conjunction with the $2.2 billion expansion of a refinery owned by Belgian oil and gas giant Total Petrochemicals.
McCall, Parkhurst & Horton is bond counsel for the port.
Mark Underhill, president of the commissioners court for the port, said they plan to call for a May bond election of about $18.8 million to refinance some existing debt and develop some recently acquired land.
He said the port is booming amid the current wave of expansion by large petrochemicals companies.
“We’ve got $15 billion of investment coming to the Port Arthur area,” Underhill said. “Motiva [Enterprises LLC] has a $7 billion expansion planned, Total has its $2 billion or so expansion plan underway, and Valero [Energy Corp.] takes the slow and steady approach in an almost constant state of expansion.”
Motiva, which is jointly owned by Shell and Saudi Refining Inc. a unit of Aramco Service Co., operates a 105-year-old refinery in Port Arthur.
Unlike many areas of the Lone Star state, Port Arthur has a declining population. The city is now home to about 55,900, down about 3.3% from an 57,755 as of the 2000 Census.
Underhill said the area is starved for skilled labor.
“We could reduce the employment rate to 0% and it still wouldn’t be enough,” he said. “We need something like 19,000 skilled workers.”
