"The Northwest Dallas County Flood Control District (NWDCFCD) was
created in 1985 to finance, construct, and maintain flood control and
drainage facilities of the District. NWDCFCD operates as a governmental
agency and currently levies a $0.30 ad valorem tax rate to fund its operations
and debt. This tax is levied in addition to any other City, School, County,
Hospital or Junior College District taxes within the District.
In 1985, the voters of the District authorized $15,000,000 in unlimited
tax bonds to be issued to fund the District projects. Another election
was held in September 1986, wherein the voters approved an additional
$3,000,000. $17,460,000 of unlimited tax bonds were issued in 1986,
and the plan of reclamation and flood control improvements were completed.
Leading up to 1992, substantially all of the acreage within the District
was not developed and property values had not increased sufficiently
to pay the bond debt due to the post-1986 recession in the Southwest.
Consequently, the District filed for protection under chapter 9 of the
Bankruptcy Code in 1992. As part of the 1992 bankruptcy judgment, the
District's debt was reorganized into the $8,424,000 Limited Tax Modified
Capital Appreciation Refunding Bonds, Series 1992 (the "1992 Bonds").
The 1992 Plan and, as a result, the 1992 Bonds, provided for an interest
rate of 8% per annum. Although the 1992 Plan was partially successful
in alleviating problems then prohibiting development within the District,
the District's property values did not increase at a rate sufficient
to pay the 8% interest and principal payments provided for under the
1992 Bonds. Available tax revenues under the tax rate cap were not sufficient
to pay current interest as it became due, resulting in the accrual of
approximately $7,005,734 unpaid Compounded Interest Liability and no
retirement of principal of the 1992 Bonds.
The District board assembled a team of consultants to begin looking
at alternatives to remedy the situation several years ago. Given that
a restructuring agreement couldn't be achieved with the bondholders,
the District and finance team decided to hold a bond election for an
authorization amount large enough to restructure the accrued and unpaid
interest liability. On May 5, 2015, the bond election was approved by
the voters. Due to the low interest rate environment and an extension
of the final maturity, the District was able to restructure the outstanding
debt and accrued unpaid interest liability to provide payments within
the current tax levy. There are no planned tax increases in the foreseeable
future, and the District now has the ability to adjust the tax rate
downward on an annual basis as they see fit. The restructuring bonds
were delivered on May 2, 2016 with a true interest cost of 2.99%."