Trophy Club Secures First PID Refinancing in Texas History, Saves Residents $16M

Posted by April Reiling on Jan 14, 2016
Tags: Community, Denton County, Government, Transparency, Town News, Parks

Trophy Club is making history as the first municipality in the state of Texas to achieve an investment grade rating on a Public Improvement District (PID) bond and to realize over $16.4M in total savings with a subsequent refinancing. The $16.4M refund for PID residents results in approximately $11,675 savings in future assessments over the life of the bond to each property owner who had not previously paid off their assessments. As a premier North Texas community, Trophy Club continues to set the pace for financial transparency and ingenuity.

“I was Mayor in 2007 when we worked on the PID project and am so proud of the high quality development that The Highlands has become. To realize such a large savings for PID residents due to smart financing really brings the project full circle. Staff deserves a lot of credit for thinking outside the box and working hard to save Trophy Club residents money,” said Mayor Nick Sanders. "Council's direction to Town Staff to get the refunding completed prior to the end of 2015 was essential to provide a sound financial position for the Town in future years.”

In 2007 the Town created the first municipally backed PID in Texas where residential lots are assessed each year to pay for the PID’s infrastructure. Known as The Highlands at Trophy Club, the PID assessments are based on lot types determined by size. To finance the PID, $27.5M in debt was issued for the infrastructure at an interest rate of 7.75% and a 30-year term. At the time investors took a risk by investing in undeveloped land, and the debt was not rated by any debt ratings agency because of insufficient information to base a rating. Today the PID has 1407 lots and to date has added $560M in taxable value to Trophy Club.

Now that the PID is almost built-out, the Town Council and staff recently pursued refinancing the PID debt in order to take advantage of historically low interest rates and the possibility that the PID bonds may receive an investment grade rating which would offer even more savings. On August 25th, 2015 the Town Council gave staff approval to move forward with pursuing the debt refinance, and working through the complex process with a financial advisor, bond counsel, underwriters and PID administrators paid off.  The refinanced debt was issued with an approximate interest rate of 3.75%, which saves the PID residents almost $16.4M in assessments over the life of the debt.  In addition to the savings, the bond’s maturity was shortened by five years. The Net Present Value Savings totals $8.8M, or over 33% of the refunded amount.

“This was one of the most difficult financings completed in Texas during the 2015 calendar year,” said Mark McLiney, Senior Managing Director at Samco Capital Markets, Inc. “It was the first “dirt deal” to earn an investment grade rating in Texas and is going to open the door for future Texas financings.”

Town Manager Stephen Seidel said, “This is a significant achievement for Trophy Club, especially since we are saving PID residents money in the long run. We were creative in our approach to originally developing The Highlands and continue to examine every opportunity to capitalize on financial wins for the community. Trophy Club is setting the standard and I am so proud of our team.”

“This is the first municipally backed Public Improvement District refunding in the State of Texas and the first to have an investment grade rating,” said Assistant Town Manager & CFO Steven Glickman.  He went on to add, “A good analogy of a transaction like this is refinancing a home mortgage to obtain a lower interest rate and lower your monthly payments.  This is exactly what we did; we lowered the interest rate and lowered the annual payments for over 1,400 residences.”    

Trophy Club is well recognized as a premier community:

  • Ranked '5th Best Neighborhood in DFW' by Dallas Morning News (2015)
  • Ranked '36th Best Suburb in America by Business Insider (2015)
  • Ranked the ‘3rd Healthiest Community in North Texas’ by Dallas Morning News (2014)
  • Ranked ‘7th Best Suburb in North Texas’ by D Magazine (2014)

The Highlands at Trophy Club
Named ‘Community of the Year’ in 2014 by the Dallas Builders Association, The Highlands at Trophy Club was developed by Centurion American and includes seven different home builders. According to Denton County Appraisal District records, in 2015 The Highlands had 1,024 households and the average market value for a home is $451,053. The Highlands includes two parks, a Community Pool & Splash Pad, amenity lakes and an eight-foot trail bordering an environmentally sensitive area.

"The Highlands at Trophy Club has become a vibrant and complete award winning master-planned community for Trophy Club residents.  None of this would have been made possible without the initial vision of the Town of Trophy Club. We commend The Town for their foresight and efforts to take advantage of lower rates and pass on a tremendous benefit to all homeowners living in the Highlands,” said developer Mehrdad Moayedi, President and CEO of Centurion American Development Group.