Midtown Redevelopment Authority
Tax Increment Contract Revenue and Refunding Bonds, Series 2017
SCS’s third senior-managed transaction completed for the Midtown Redevelopment Authority
This was the firm’s third senior-managed transaction completed for the Authority. The proceeds of the bonds were used to fund (i) street, landscaping, and parking garage improvements, (ii) affordable housing, and (iii) partially restructuring the 2020 maturity of the Series 2011 Bonds. The 2020 maturity of the 2011 Bonds were restructured to bring projected debt service coverage up to 1.40x in 2020.
The Bonds were offered as uninsured (A3/A/NR) and AGM insured (A2/AA). After a bidding process to provide a surety bond and bond insurance, the best bid came from AGM which required that 25% of bonds be insured for the use of its surety bond. SCS analyzed the cost effectiveness of the bond insurance and determined that the 2031 to 2033 serial maturities and 2038 term bond provided the best value to insure while minimizing the amount insured to 25% and creating flexibility in pricing.
At the time of issuance, there were minimal tax increment bonds recently sold and the market was in price discovery mode for these types of credits.
After the order period, there was strong investor interest in the 2027 to 2033 serial maturities and the 2036 and 2038 term bonds and reduced spreads by 1 to 6 basis points.
However, the demand for the 2019 and the 2021 to 2026 maturities never transpired which required a re-pricing of 1 to 3 basis points.
Siebert Cisneros Shank’s sales desk submitted nearly $43 million in orders and stepped up to underwrite $3.69 million in unsold bonds for the benefit of the Authority.