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SMDA approves preliminary steps for Series 2024 TIF revenue bonds, names FMS Bonds as underwriter
Summary
The South Manvel Development Authority heard a Hilltop Securities sizing and market update for roughly $3.37 million in Series 2024 tax-increment contract revenue bonds, voted to authorize a preliminary official statement and designated FMS Bonds as underwriter; the board cited uncertainty from a Texas Comptroller list affecting some large firms.
Joe Morrow, financial advisor with Hilltop Securities, told the South Manvel Development Authority that the proposed Series 2024 tax-increment contract revenue bonds are sized at about $3,370,000 and that the board should expect timing and pricing to depend on market conditions.
Morrow said the authority lost roughly $10 million in assessed value this year between certified value and the adjusted levy and that the city’s newly introduced residential homestead exemption contributed to the reduction. "From our certified value to the adjusted levy, it went down about $10,000,000," he said, adding that the exemption—capped at 20 percent and currently set at 10 percent for this jurisdiction—will affect coverage going forward.
Morrow described the underwriter solicitation process: the authority solicited five firms and received three proposals. He explained his scoring system—fees (40 points), personnel experience (20), underwriting experience (20) and marketing insight (20)—and compared take-downs and expense schedules among RBC Capital Markets, FMS Bonds and Cruz and Associates. He said FMS Bonds and RBC were close in his evaluation, with FMS recommended for this deal.
Morrow flagged uncertainty stemming from a Texas Comptroller list tied to recent state laws concerning non-discrimination provisions and noted that large, diversified firms can be affected because of mutual funds or other business lines. "The comptroller flagged that because, you know, green energy is not oil and gas," he said, describing how that list has left some issuers and underwriters unsure how enforcement will be applied and whether firms must make particular representations.
After questions from board members — including whether the bond issue would have been larger without the $10 million reduction (Morrow said it would likely have been between $6 million and $7 million) — the board voted to authorize preparation of a preliminary official statement for the Series 2024 bonds. The motion to authorize the preliminary official statement passed unanimously, 4–0.
The board then considered and voted to designate FMS Bonds as the underwriting team for the Series 2024 issuance; that motion also passed unanimously, 4–0. Morrow told the board the timeline: the authority will meet in two weeks to approve the preliminary official statement and, about four weeks from the presentation, expects to return to sell the bonds, with proceeds delivered roughly a month after sale and funds available to reimburse the developer around mid-December.
The authority did not set a fixed interest rate at the meeting; Morrow said pricing will depend on market conditions closer to the sale date.
The board took formal votes on both steps required to move the issuance forward and did not request additional alternatives beyond the two underwriter options discussed.
