Monongalia County approves documents to release tranche 2 of Westridge excise-tax bonds, conditional on developer filings

Monongalia County commissioners voted May 14 to execute and deliver documents that would allow release of tranche 2 of the county's outstanding special district excise tax revenue bonds, series 2023A and 2023B, for the Westridge development, contingent on the developer filing a tranche-release request and delivering supporting reports.

County legal/financial counsel Tom Heyman told the commission the bonds were structured in tranches and that tranche 1 was redeemed last December. Heyman said the county attempted to extend deadlines for tranches 2 and 3 but a bondholder refused, leaving the county to proceed under the existing schedule. He said the developer believes a closing necessary to trigger tranche 2 release would occur that day and that the developer would file the tranche release with the trustee, copy the county and bond counsel.

The county will require a Municap analysis (a financial report) to be attached to the tranche-release request. Heyman said the Municap report shows the anticipated tranche-2 revenues exceed what was anticipated overall when the bonds were issued in 2023, but that the first two years of projected revenues show a shortfall. He described a proposed tenth supplemental indenture that would allow monies to be held in a capitalized interest account to cover that near-term shortfall while leaving the overall release test satisfied. Heyman said a tax opinion from Fred Williams is needed to confirm whether that arrangement is permissible; if the tax opinion cannot be obtained, the developer would provide funds to make up the shortfall.

The commission's approval authorizes the county to execute the tenth supplemental indenture, the county certificate directing the trustee to move funds as required for tranche 2, and other documents necessary to effect the tranche release, but the approvals are expressly conditional on the developer delivering the tranche-release request and Municap's report and other items required by the bond documents.

Commissioners moved and seconded the order and the motion carried by voice vote.

Background: Heyman summarized that the bonds were issued in tranches at closing and that the release of later tranches depends on meeting financial tests comparing projected project revenues to debt service. He said tranche 1 was redeemed December 1, 2024, and that the county sought but did not obtain an extension of deadlines from all bondholders for tranches 2 and 3. The county was presented with an option to use a capitalized interest account or a developer-funded make-whole payment to address shortfalls in the first two years while still meeting overall revenue tests, according to the Municap analysis that will accompany the tranche-release filing.

The order includes standard conditions that release actions occur only after required filings and certifications are delivered to the trustee and other bond parties.

No public speakers opposed the action during the meeting record; a work session with the developer was scheduled for 11:00 a.m. the same day.

Ending: County staff and counsel will accept tranche-release documents at the trustee if the developer and Municap deliver the required materials and the tax opinion or developer-funded alternative is secured. The commission did not set new deadlines; it approved executing the documents as conditioned in the order.