Bond: Spring West MUD


Bond Announcement

Reviewer’s Report:
Ok I looked through the 2 propositions. I don’t really think that I can speak to the first one, which is a proposition to issue $34,500,000 in bonds over 40 years to cover new water works projects. I don’t have access to the engineer’s report (and I don’t know that I could read it anyway) detailing the needs for all of this stuff. I know that the Spring West MUD has done similar things in the past – 08/08/81, 11/04/2003 and 11/02/2004 for a total of over $37,000,000, and all of those were also for 40 year bonds, so a good portion of the funds from those should still be in play. But I also looked at the growth of Spring, and there are a number of new neighborhoods that need water supplied to them, and across the board in Texas the water infrastructure needs to be updated. So I just don’t know.

For the 2nd proposition, they’re asking for:

THE ISSUANCE OF $10,000,000 REFUNDING BONDS TO REFUND BONDS AUTHORIZED BY ARTICLE 16, SECTION 59 OF THE TEXAS CONSTITUTION AND THE LEVY OF TAXES, WITHOUT LIMIT AS TO RATE OR AMOUNT, IN PAYMENT OF THE BONDS.

A refunded bond is a municipal bond that the issuer decided to redeem from the bondholder prior to its maturity date. This is done to avoid paying high interest expenses, so it is generally done when interest rates are low. New bonds are given to the bondholders at lower rates, canceling out the previous bonds.

The issuance of the refunded bonds will likely save the Spring West MUD interest costs since the Federal Reserve has stated that they are going to continue to increase the interest rate in 2017.