Trustees approve TIF-backed bonds to finance WPX headquarters; authority not on the hook for debt

Trustees for Tayo voted to authorize the issuance of bonds not to exceed $8,000,000 to fund an economic incentive tied to TIF District Number 15, which will finance the WPX headquarters building.

Warner John Weidman, acting as bond counsel, told trustees the resolution authorizes incurrence of indebtedness to fund the construction behind the boardroom and described how the obligation works: “Tayo’s obligation is only to collect the TIF increment and transfer it to the trustee for payment,” he said. “None of your credit nor your funds are being used to pay these bonds.”

Weidman said the expected principal at pricing is likely to be closer to $6.7 million and that the resolution provides flexibility up to $8 million and contemplates a 20-year term and a 7 percent interest rate as pricing assumptions. He said the bonds are structured so that if the TIF increment exceeds projections, surplus receipts will go to pay down principal earlier, which reduces interest over time.

Trustees also approved a housekeeping amendment to the existing development finance/assistance agreement to add authorization for the bond transaction approved at the meeting. Staff said the change does not increase any not-to-exceed amounts; it simply authorizes the bond action.

The board was told the transaction will next go to the city council for final approval, and that bond sale and closing are expected in late June and early July, respectively. The board was also told Tayo will receive an issuance fee equal to one-tenth of 1 percent of the outstanding principal for the life of the bonds.

Trustees did not identify any use of general Tayo credit or other Tayo assets to secure the bonds; Weidman repeatedly emphasized the obligation is limited to the collection and forwarding of TIF increment receipts.

Trustees approved both the bond resolution and the development finance agreement amendment by roll call vote.