DALLAS - Missouri City, Tex., plans to bring $35.6 million of general obligation debt to market Tuesday for some infrastructure expansions on the heels of an upgrade by Standard & Poor's.

The growing suburb about 20 miles southwest of downtown Houston will issue nearly $21.1 million of GO bonds and $14.5 million of combination tax and revenue certificates of obligation.

Morgan Keegan & Co. is lead manager for the negotiated sale. RBC Capital Markets and Southwest Securities Inc. are co-managers.

First Southwest Co. is the financial adviser to the city. Andrews Kurth LLP serves as bond counsel.

The debt is structured as serials with the bonds reaching final maturity in 2028 and the certificates in 2029. Proceeds from the certificates will fund utility expansions, while the bonds will be used for improvement to streets, parks, and recreation centers.

Standard & Poor's upgraded its underlying rating on Missouri City to AA-minus from A-plus due to its "historical maintenance of very strong reserves and continued economic expansion."

Analysts said officials managed to boost reserves in each of the past four years. The city ended fiscal 2007 with an $8.9 million unreserved general-fund balance, "or a very strong 33% of expenditures," according to analysts, and projections show another $250,000 operational surplus for 2008.

Officials budgeted to use some of the accumulated reserves to fund onetime capital improvements in fiscal 2009, analysts said.

Next week's sale is the fifth tranche from a 2003 bond package of $75 million.

Following the sale, the Missouri City will have $33.1 million of authorized but unissued debt with plans to sell roughly $10 million each year for the next several years, according to finance director Wesley Vela.

Earlier this week, the City Council decided to put a $17.5 million bond referendum on this November's ballot for continued funding for parks and recreation centers, including purchase of a golf course.

City manager Frank Simpson said in a news release that the acquisition of the golf facility is "intended to enhance the quality of life, create a community gathering place, establish a featured destination, and increase property values."

Fitch Ratings assigned an A-plus rating to next week's sale and analysts said prospects for continued tax-base growth are promising due to "the extension and expansion of transportation corridors leading from Houston and numerous high-end master planned communities in the city's extra-territorial jurisdiction."

Fitch analysts also said these developments tend to attract additional commercial and industrial activity, and "future annexation of these communities once near completion in the mid- to long-term will significantly enhance the city's property-tax base without major capital needs."

Moody's Investors Service rates Missouri City's GO debt at Aa3. Its current population of about 70,000 is up 32% from the 2000 Census. Fitch said the taxable-assessed value has averaged 7% annual growth the past five years to nearly $4.14 billion for fiscal 2008, with another 4% gain to $4.32 billion projected for this year.

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