DALLAS — Shreveport, La., has scheduled the single largest bond issue in the city's history.
Next week's sale of $81.5 million of general obligation debt will be the first tranche from a $175 million bond authorization.
The competitive sale is set for July 12.
The three-part, $175 million bond program approved with large majorities in April is the largest debt program ever adopted by voters in the northwest Louisiana city of some 200,000 residents.
Shreveport's GO bonds are rated A-plus by Standard & Poor's and A1 by Moody's Investors Service. The bonds are not insured, but have been pre-qualified for Assured Guaranty Municipal AA-plus enhancement as a buyers option.
Jerry Liang of Grigsby & Associates Inc., the city's financial adviser, said the well-rated debt should be attractive in a municipal market starved for supply.
He said the pre-marketing efforts indicate bids will come in from four to seven regional and national syndicates.
"We anticipate a very competitive market amongst the underwriters," Liang said earlier this week. "We are expecting a similar number of bids as Louisiana got on its GO bonds in March, with similar spreads to [Municipal Market Data]."
"The spread to MMD for the state's transaction was 20 to 27 basis points," he added. "We would expect roughly the same spreads to MMD, or, given today's market, a TIC bid of under 4.35%."
Boles Law Firm APC is Shreveport's bond counsel, with Jacqueline Scott & Associates as co-bond counsel. Next week's issuance will provide $37.6 million of proceeds for water and sewer projects, $25.1 million for public safety and parks projects, and $18.8 million for street and drainage efforts.
The original authorization was $92.7 million for water and sewer, $44.3 million for streets and drainage, and $38 million for public safety and parks.
The city expects to issue the remaining authorization in two tranches over the next two to three years, based on project needs.
The $93.5 million remaining from the April 2011 authorization includes $55 million for water and sewer, $25.5 million for streets and drainage, and $12.9 million for public safety and parks.
The sewer and water bond question was approved by 62% of voters. The streets and drainage question passed with 60% approval, while 57% of voters backed the public safety and park proposal.
With the sale, Shreveport will have $224 million of outstanding GO debt.
Shreveport Mayor Cedric Glover said approval of the three debt proposals came after months of hard work by a bond committee studying the city's needs, and extensive public outreach efforts to explain the debt program to voters.
"We had a great team of folks," Glover said. "We began by appointing a 16-member citizen's bond-issue study committee to determine what was needed, and they spent more than six months to really see what could be accomplished with the resources we had."
The mayor said the panel originally considered a $100 million to $125 million bond request, but that proposal grew to $165 million.
In November 2010, the City Council opted to put a $175 million request before the voters, Glover said, .
"It was decided that the $100 million was not sufficient, and then that $165 million was not enough," he said. "The $175 million request had the unanimous approval of the council, and we felt we had a compelling case to make to the voters that the city needed these projects."
Before the election, voters were assured that the current property tax rate of 26.56 mills for debt service would not need to be raised to support the bonds.
Glover said that is a promise that will be realized.
"The millage will absolutely not have to be raised," he said. "We have one of the lowest rates in the state, the lowest we've been since 1990, and our property values keep going up."
The city could issue another $113 million of new debt without raising the property tax rate, according to the mayor, although that is not currently in the cards. The property tax brings in about $37 million a year.
Shreveport's assessed property tax based gone up about 4.2% a year for the past five years to a true valuation of more than $12 billion. Assessed taxable valuation is $1.37 billion.
The focus on needed infrastructure upgrades and expansions was another factor in the widespread support for the city's bond proposal, Glover said.
"This is bread-and-butter, nut-and-bolt infrastructure," the Democratic mayor said. "We're paying for roads, water, parks and fire stations. Everyone sees the need for those things."
As the infrastructure programs progress and property valuations increase, Glover said, the city might consider new debt for economic development and quality-of-life projects.
"But that's down the road," he said. "Right now we're focusing on things that are essential and critical."
The city government will finance upgrades to its sanitary sewer system with $71.5 million of the proceeds from the authorized bonds to comply with federal regulations.
The total sewer restoration project is expected to cost $200 million. Glover said the city opted to finance a portion of the work with GO bonds to avoid steep increases in utility fees that would be needed to support revenue bonds.
If the city did not act on its own, Glover said, the federal Environmental Protection Agency would require the work.
"We are taking proactive steps to avoid that," he said. "We have to start somewhere and a failure to do anything is not an option."
If voters had not approved the sewer bonds, Glover said, water rates would have gone up 29% of finance the work.
Shreveport will dedicate $8 million of the proceeds to bring city facilities into compliance with the federal Americans with Disabilities Act.
In addition to $71.5 million earmarked for sewer projects, Shreveport's bond program will also provide $21 million for water projects, $31.7 million for street upgrades, $12.6 million for drainage efforts, and $5.4 million to replace two fire stations.