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Houston officials outline interim financing and bond plans including $400M for GRB expansion, $350M utility refunding and $645M in airport GARBs
Summary
Finance Director Melissa Dubasky told the committee the finance working group recommends negotiating interim facilities for a $400 million GRB expansion, refunding $350 million of utility bonds to capture about $30 million NPV savings, and issuing approximately $645 million of general airport revenue bonds to fund Terminal B and other airport projects; council action is expected in February.
The Houston finance working group outlined a package of upcoming financing transactions at a Finance Committee meeting, recommending interim and long-term debt actions to support the GRB expansion, combined utility refunding and airport capital projects.
Finance Director Melissa Dubasky said the convention and entertainment facilities department and Houston First requested term sheets for interim financing of up to $400,000,000 to support capital expenditures for the GRB expansion. The finance working group recommended negotiating interim financing facilities with Huntington National Bank and Truist Bank and expects related council reports and resolutions (RCAs) to be brought before council in February; a reimbursement resolution was noted for January.
On utility system debt, Dubasky said the combined utility system’s callable 2014 first-lien refunding bonds are being evaluated for refunding in a transaction the group expects to be about $350,000,000. She said preliminary estimates anticipate roughly $30,000,000 in net present value savings (about an 8.64% NPV savings) with an estimated all-in interest cost of 3.58%; exact savings and pricing will depend on the market pricing date in spring.
Dubasky also described expiring liquidity facilities for variable-rate demand bonds (notably two series with 01/28/2025 expirations) and the working group’s recommendation to renew liquidity support with the current provider for three years, with a council recommendation expected by end of January.
For the Houston airport system, Dubasky said financing will include a mix of United-backed special facility revenue bonds (SFRBs, capped in the MOA at $1.95 billion) and general airport revenue bonds (GARBs, capped at $624 million). The working group anticipates issuing GARBs in a series of transactions to finance Terminal B improvements with United, Hobby West Concourse gate expansion and a central utility plant; Dubasky estimated the GARBs portion at about $645,000,000 for the initial transaction, with council action targeted in February, pricing in March and closing in April.
She added the airport uses commercial paper (a $350,000,000 program) as interim funding; the underlying facility expires in March and the working group recommended renewing the facility with the current provider for three years, with the renewal to be brought to council later in the month.
Councilmembers asked for supporting pro formas and feasibility studies. Councilmember Julian Ramirez asked whether revenue projections for Terminal B were available; Dubasky said the feasibility study is still underway and that pro formas will be completed before the bond ordinance comes to council. No formal actions were taken at the committee-level presentation; staff said they will return with RCA and ordinance items for council consideration.
