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Terrell approves assessments and bond sales to fund Arboretum Estates infrastructure
Summary
The Terrell City Council approved service and assessment plans and authorized bond sales to finance streets, utilities and parks for the Arboretum Estates development, including two separate improvement-area assessments and a bond issuance package for improvement area 1.
Terrell City Council approved service-and-assessment plans and authorized bonds on Tuesday to fund public infrastructure for the Arboretum Estates development, including a $21.375 million bond authorization for Improvement Area 1 and a separate financing package for the larger, later-built major improvement area. Council and staff said the money will reimburse the developer for streets, water, sewer, drainage, landscaping, parks and trails the developer installs.
The council approved the service and assessment plan after a presentation from Jordan Sawyer, the city’s consultant with P3Wertz, and Jason Hughes, the city’s financial adviser at Hilltop Securities. "The bonds were sold in the open market; those proceeds will be held with a trustee and used to reimburse the developer after the city accepts completed improvements," Jordan Sawyer said.
Why it matters: the assessments create the revenue stream — levied against the benefitting parcels inside the public improvement district (PID) — that secures the special-assessment revenue bonds. Council members said the financing is intended to keep the city’s general fund and water/sewer fund separate from developer reimbursements.
Details: the council approved ordinance No. 3129 accepting the final service and assessment plan for the Arboretum Estates PID and levying assessments against the major improvement area. For Improvement Area 1 the city authorized $21,375,000 in bonds (net proceeds available to the developer about $16.8 million) to fund infrastructure now under construction. Council also approved an ordinance (No. 3130) specific to Improvement Area 1 and separately approved the bond issuance ordinance for the Improvement Area 1 project.
Council discussion focused on the mechanics and timing of reimbursement and long-term tax implications. Jason Hughes said the improvement-area bonds are nonrated and therefore carry higher interest rates than city general-obligation debt; he showed an estimated 30-year tax-rate impact for typical parcels in the area. "These are reimbursement bonds; all costs and reserves are included in the bond structure so the bonds are self-contained," Hughes said.
What happens next: the bonds proceed to closing, and funds will be placed with a third-party trustee. The developer must complete qualifying public improvements, submit draws with documentation and then be reimbursed from the bond proceeds after city review and acceptance. City staff and the consultant team will monitor annual updates and the developer’s draw requests during construction.
Background: the Arboretum Estates PID approvals were the latest in a series of PIDs the council has approved to fund infrastructure in new developments using special-assessment bonds rather than up-front public expenditures.
