Kyle council approves bond ordinances

KYLE — At its meeting on May 16, Kyle City Council voted to approve ordinances that will expand and improve districts throughout the city.

The approved Service and Agreement Plan for Public Improvement Districts (PID) consists of 259.02 acres in Kyle to be subject to various improvement projects such as:

• Adding lighting, sidewalks, ADA ramps and signage to Heron Drive and additional roadways

• Creating retention, detention and wet ponds, outlet structures, drainage lines and erosion control;

• Adding a wet pond with irrigated trees, planting beds and sod at entryways to monuments, trail lighting, fencing and a playground.

Each ordinance approved uses bonds sold in the market to pay for each project; however, the type of bond changes the way each is perceived by investors.

PID bonds are a new development that many investors are interested in supporting, allowing for the interest rate to be higher at a 5.99%. The second Tax Increment Reinvestment Zone (TIRZ #2), sitting at a 4.55%, is in a standard bond market. This difference is due to a shift in banking investment patterns.

“The banking crisis with Silicon Valley Bank changed the way people are looking to buy bonds right now and so we sold [the standard bonds] at a lower total price. It is just a function of how the market is wanting bonds,” said Mark McClinney, a financial representative of SAMCO Capital, the company responsible for the bonds. “Those banks that are typically buying municipal bonds, they moved out and they’re not buying bonds because they don’t want fixed income right now.”

The lack of banks purchasing bonds forces prospective sellers to abide by what the current investors are asking for: lower interest.

Inflation is an additional factor to the rates. As inflation increases, the interest rises and when it decreases, the interest rates fall as well. The current inflation rate is at its lowest point within the last 18 months at under 5%.

Despite the market, each bond has been sold, and Robert Rivera of SAMCO Capital gave high praise to the city and its value on the market.

“[The] city of Kyle is tremendously sought after across the country by the investors who are excited to be here,” Rivera said.

TIRZ #2's bonds are set at $8,265,000, $8 million of which will be used specifically for the retail road project.

“We are now one step closer to one, constructing the main retail streets of the Brick and Mortar District and, two, acquiring several strategic tracts of land for development of community assets, the first of which will be 11 acres to add to our sports complex site,” said Mayor Travis Mitchell. “We can now begin the process of designing and constructing the regional Sportsplex funded in the 2020 GO bond.”