Katy City Council has approved the refinancing of long-term bonds used to fund the construction of the Merrell Center, a move that financial analysts say will save taxpayers more than $7 million.
The 2002 bonds were issued by the Katy Development Authority in conjunction with the City of Katy and the Katy Independent School District.
The Katy ISD Board of Trustees and Katy Development Authority have also approved the refinancing.
The city’s financial advisor, Gene Shepherd, told the council that refinancing the bonds to take advantage of lower interest rates will result in substantial savings.
“Based on our analysis, the Authority could save approximately $3,697,871 in net present value savings from the current refunding, which is 19.7 percent of the part amount of bonds refunded,” Shepherd said in making his recommendation. “In more concrete terms, the refunding could save the Authority approximately $528,302 in average annual debt service and $7,396,228 in total gross savings.”
Shepherd also said a buyer for the refinanced bonds has already been identified.
Attorney Steve Robinson, representing the authority, stressed that no city funds were involved in the original bond issue.
“The money was provided to Katy ISD by the Katy Development Authority for construction of the Merrell Center,” Robinson said.
First opened in 2005, the Merrell Center is named for former Katy ISD Superintendent Leonard E. Merrell.
Funding for the facility came from a Tax Increment Reinvestment Zone, or TIRZ, developed by the school district in partnership with the City of Katy and the Katy Development Authority. Property tax revenue generated by the Katy Mills Mall is used to pay for the Merrell Center and its operations. The bonds are not Katy ISD bonds, and are issued by the City of Katy and the Katy Development Authority.
Because the bond financing was structured by the Katy Development Authority through the TIRZ, bonds for the Merrell Center did not add additional tax or debt burden to the school district and are administered by the KDA.