City Council approves $84.7 million in debt for roads, convention center, other infrastructure 

The Round Rock City Council approved Thursday, April 22, five debt issuances totaling $84.7 million to pay for new roads, a convention center and public infrastructure at Kalahari Resorts and Conventions, as well as vehicles for the City fleet. 

The debt issuances backed by property taxes have been rated AAA, the highest possible, by S&P Global (formerly Standard & Poor’s).  

“Our excellent bond ratings mean we can borrow these critical funds at the lowest possible cost,” Mayor Craig Morgan said. “The money we’re investing in infrastructure and major economic development partnerships will have an even greater return because of the City’s outstanding financial stewardship.”

Round Rock is one of only eight cities in Texas to have AAA ratings for both property tax-backed debt and utility system debt. 

The debt for roads will be repaid through property tax revenue and roadway impact fees, which are paid by developers. The debt related to the Kalahari project is considered “self supporting,” said Susan Morgan, the City’s Chief Financial Officer. Principal and interest payments for these bonds are expected to be paid from select City and state tax revenues generated by the Kalahari project and are not expected to impact the City’s property tax rate.

The largest issuance is $30 million in Certificates of Obligation (COs) to pay for expanding the City’s street network. This is the third of five anticipated bond issues approximating $140 million to fund the $240 million, 5-year road expansion program we call Driving Progress. This issuance drew a 1.79 percent interest rate. 

Among the potential projects in this round of funding are improvements to: Deepwood Drive, Gattis School Road, Kenney Fort Boulevard, Logan Street, McNeil Road, North Mays Street, Oakmont Drive, Old Settlers Boulevard, Red Bud Lane, RM 620, SH 45 Frontage Road, University Boulevard, Wyoming Springs Drive, County Road 112 and the South Mays Corridor.

The second largest issuance is $20.9 million in sales tax revenue bonds (STRB) for project costs related to the 200,000squarefoot convention center owned by the City of Round Rock located adjacent to the Kalahari resort hotel. It is the second of the two planned Round Rock Transportation and Economic Development Corporation (RRTEDC) bond issues to fund $40 million to construct the facility. 

The sales tax-backed bonds were upgraded to AA by S&P Global. The first STRB issue for the Convention Center occurred in July 2019 and was rated at A+. Because of the rating upgrade, the City was able to negotiate a 2.78 percent interest rate on this debt issuance for the Convention Center. The 2019 issuance has a 3.37 percent interest rate.

The RRTEDC is a seven-member board that promotes economic development in the City of Round Rock through transportation projects and other projects as allowed by state law. One-half cent of City sales tax goes directly to this Type B Corporation to fund economic development projects in the City. The RRTEDC plays a critical role in fulfilling the agreements and financial transactions associated with the Kalahari Resorts development. 

The City owns the Convention Center while Kalahari is responsible for all operation and maintenance costs. The Convention Center provides a large-scale meeting and exhibition space previously unavailable and represents a valuable new industry for Round Rock that improves the community’s economic diversity.

The City expects to net $4.6 million a year in tax revenue from the Kalahari project, Morgan said. 

There are two $15.4 million CO issuances related to the Kahalari project, one for on-site public improvements and the other for off-site public improvements:

  • The on-site public improvements include: constructing transportation improvement projects – such as turn lanes and signals at U.S. 79 and Kenney Fort Boulevard – as well as water, sewer and drainage improvements on the 351-acre property. This issuance drew a 1.74 percent interest rate.
  • The off-site public improvements include: constructing transportation improvements – such as improvements to U.S. 79, Joe DiMaggio Boulevard, Gattis School Road and Kenney Fort Boulevard – along with water, sewer and drainage improvements that serve the project. This issuance drew a 1.73 percent interest rate.

The last item is $3 million in Limited Tax Notes (LTNs) to purchase City vehicles. The term of the notes is 5 years, and they are repaid through property tax revenue. This issuance drew a 0.34 percent interest rate.

The LTNs will pay for the replacement of general fund vehicles. The City has traditionally paid for the replacement of its general fund fleet using a capital lease finance agreement. Due to current low interest rate conditions, issuance of LTNs is the more cost effective option. 

A limited tax note is a note issued under Chapter 1431 of the Texas Government Code payable from ad valorem taxes, within the limits set by state law, which can have a maturity of up to seven years if issued for the construction of public works or the purchase of materials, supplies, equipment, machinery, buildings, lands or rights-of-way for the City’s authorized needs and purposes. 





Round Rock’s digital newsletter providing residents news, events and general information regarding city government.

Scroll to Top