Queen Creek sells $75M in bonds for infrastructure building

Queen Creek’s $75 million bond issuance to finance new public safety and road infrastructure has been deemed a success.

At its Wednesday meeting, the Queen Creek Town Council received an update on the bond sale, which began Dec. 10. The sale went forward after the council approved the issuance at its Nov. 6 meeting.

Among the major investors that purchased the bonds were Travelers Investment Management Co., Fidelity Investments and Northern Trust.

“It’s quite an accomplishment for the town of Queen Creek when we’re out in the bond market (that) we have a really successful bond sale like we did,” Scott McCarty, deputy town manager and chief financial officer, said to the council.

The town’s AA+ bond rating from S&P Global and FitchRatings are an underlying condition in the success of the sale, McCarty said. The rating allowed the town to obtain a 4.38% interest rate on the bonds as opposed to the 4.75% that was expected.

Annual payments on the debt are expected to range from $3 million to $7.5 million over the life of the debt. The debt will be paid through impact and capacity fees, the operating budget, the 2% sales tax dedicated to transportation, and water and wastewater rates.

The town’s bond rating is based on Queen Creek’s expected continued population growth, strong demographics and economic base, effective financial management policies and practices, revenues exceeding expenses in the operating budget, well-funded pensions, and efforts to secure water supplies, McCarty said.

“To be fair to both sides, they have a comment (on the bond rating report) about our debt burden and how that compares to other peer medians,” McCarty said. “But they quantified that it is relative to growth and we’re really only issuing debt to pay for things that relate to growth, and that the burden is manageable in a sense that we’re in a growing phase, we’ll continue to grow, and the reason that we’re in investing in the infrastructure is for the people and the businesses that are either here or that are coming.”

The $75 million will be used to build a joint police and fire support facility, design a police headquarters with a parking garage and a fleet facility, as well as new roads.

Over the next five years, the town plans to build an estimated $215 million worth of infrastructure, with $150 million of that financed through bonds. The issuance of those bonds has been broken into two portions — the $75 million sold in December and a second $75 million issuance set for 2026.

In 2023, the council adopted a police master plan that identified “the major infrastructure the police department needs to meet the town council’s adopted level of service,” a staff report stated.

In 2016, the town council adopted a transportation master plan “and has been building the new roads identified in that document at a very aggressive pace ever since,” the staff report stated.

The bonds will be used to complete two major street projects. Hawes Road from Ocotillo to Rittenhouse roads will be widened to five lanes and will include a roundabout, pavement, sidewalks, drainage management, traffic signal, roadway lighting, markings and signs.

The second major road project — Ryan Road from Crismon to Signal Butte roads — will have three lanes and include an off-street bike lane.

“It’s always an unknown as you start the (bond) process but now that we can kind of look back, we feel like in hindsight we timed it well, we did what we needed to do” McCarty said. “We need the money to build those projects and move forward.”

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