FUNDING THE FREEPORT HARBOR CHANNEL IMPROVEMENT PROJECT
Cost of the Freeport Harbor Channel Improvement Project – $295 million
More than half of the Freeport Harbor Channel Improvement Project is expected to be paid with federal funds, with approximately $165 million to be provided by the U.S. Army Corp of Engineers (USACE).
Port Freeport’s commitment to this project is $130 million, the amount of the bond package approved on the May 2018 ballot.
In the USACE FY2020 work plan, Port Freeport received $19 million to begin construction.
In the USACE FY2021 work plan, Port Freeport received $24.9 million in funding. To date, Port Freeport has received $43.9 million in federal funding for the project.
Approved Bond Package
General Obligation bonds for the Freeport Harbor Channel Improvement Project will be issued over several years in multiple series as work on the channel progresses. The phased issuance enables the Port Commission to manage the tax rate at its current level.
Current Bond Issuances:
January 2021 – $39.2 million of the $130 million bond package was accounted for with the 2021 General Obligation Bond issuance.
June 2019 – $35 million of the $130 million bond package for the Freeport Harbor Channel Improvement Project was accounted for with the June 2019 General Obligation Bond issuance ($31.8M Par Issuance, $3.2M Net Premium).
May 29, 2019 – Resolution approving Preliminary Official Statement
How will the bond package impact taxpayers in the Port Freeport Navigation District?
The bond package can be accomplished without an increase in the Port’s total tax rate of $0.040000.
The total tax rate for Port Freeport has been reduced 25% since 2011.
The current total tax rate of $0.040000 includes approximately one cent directed to Maintenance and Operations (M&O)* and three cents dedicated to debt service** .
This realignment is possible, in part, because a previous tax-supported bond issue was fully repaid in August 2019, creating additional capacity within the existing tax rate. Additionally, bonds for the Freeport Harbor Channel Improvement Project will be issued over several years in multiple series as work on the channel progresses and as new value from expiring industry tax abatements is added to the tax roll. This phased issuance enables the Port Commission to manage the tax rate at its current level.
Navigation District Resident Tax Exemptions
Multiple Port-approved tax exemptions are available to residents.
At the Port’s current tax rate of $0.040000:
Homestead – 20% exemption
Navigation District residents with a mean home value of $155,000 claiming a homestead exemption, pay $49 per year or $4 per month.
65 and older or disabled – Additional $175,000 exemption*
Navigation District residents with a home value of $218,750 or less claiming a Homestead exemption and the 65 and older or disabled, pay no tax to Port Freeport.
*Port Commission approved September 10, 2020
Tax Rate Comparison
The Port Freeport tax rate is among the lowest taxes when compared to other taxing entities within Brazoria County.
Industrial and Residential Mix (Taxable Values)
Commercial and industrial entities in the Navigation District pay 70% of the Port’s total annual tax levy. That percentage is expected to increase as new taxable value is added to the tax rolls from expiring tax abatements.
Tax Rate History (per $100 of Value)
The Port’s tax rate has declined 25% since 2011.
Bond Rating and Future Impact
The Port’s current bond rating is “Aa2” by Moody’s Investor Services, and the bond package is not expected to impact this rating. Keeping one-cent dedicated to Maintenance and Operations (M&O) has a positive impact on Port Freeport’s credit rating.