DALLAS - Despite the national slowdown in the housing market, people continue to flock to the exurbs northeast of Dallas, prompting local officials to seek approval for bond issues to deal with the ongoing influx of new residents.
Earlier this month, Rockwall County commissioners decided to put a $100 million road bond referendum before voters in November.
"We have a crying need for roads," county treasurer Bill Sinclair said. "One of the proposed projects involves State Highway 66 that runs right through Fate and should enhance commercial development in the town."
"Population growth tends to drive commercial development and you try to get ahead of the growth with infrastructure improvements, but it doesn't always turn out that way," he said. "Still, I think people are so frustrated with the congestion that they'll vote intelligently and the bond will pass."
Most of the county's roads were built more than 50 years ago as farm-to-market roads to accommodate one-way traffic in each direction. Many also lack adequate shoulders and have steep road beds due to multiple resurfacings, officials said. They were "designed to transport crops, not thousands of cars and trucks each day," according to the bond referendum.
Rockwall County, which is the smallest in Texas at 147 square miles, is the third-fastest growing county in the country. The population rose 60.5% to 69,155 in 2006 from 43,080 in 2000, according to the Census Bureau. Three quarters of the county electorate approved a $17 million bond package in 2004 to build four interchanges on Interstate 30 within the county to improve access to Dallas, which is about 30 miles to the west.
Fate Mayor Bill Broderick echoed the need to widen roads in the area and expects the county-wide bond referendum to pass. He said development of a new subdivision south of I-30 has begun with an expected build out capacity of 1,700 to 1,800 homes.
"I think the residents will strongly support anything to get some relief out there on these roads," Broderick said. "Our tax base is mostly supported by homes and we'd like to take advantage of the commercial side of growth to keep rates as low as we can."
But getting ahead of growth is hardly an easy task, especially when your town's population has risen more than tenfold this decade. Broderick noted that a road sign marking entry into Fate reads "Population 463," but the estimated current population is more than 5,100.
Fate's property tax levy is the lowest of any city in the six-county area, he said, so increased commercial development is essential to augment revenues and enable Rockwall County to provide the basic infrastructure needed for the increased population.
Sinclair said the exact timing of any bond issuance depends upon when state and federal funds become available.
"Of course, we're only seeking the authority to issue the bonds as we want to be well postured to jump on [state or federal] funds when we're able to get them," he said.
None of the $17 million authorization from four years ago has been sold, as no matching funds have been available, Sinclair said.
In the county's bond initiative, officials said the Texas Department of Transportation and the Regional Transportation Council "have stated that local involvement must be shown in order to keep our projects on their agendas."
Officials expect to leverage the $100 million of bonds into $310 million of roadway improvements through matching state and federal funds. The road bonds could possibly increase the county's property tax rate, depending upon the level of growth.
Some estimates project 250,000 residents within the county upon complete build out around 2030.
In April 2007, both Standard & Poor's and Moody's Investors Service upgraded Rockwall County's underlying ratings, citing the expanding tax base, consistently strong financial operations, strong wealth levels, and ample reserves driven by annual surpluses.
Moody's raised its rating to Aa3 from A1 and Standard & Poor's bumped it to A-plus from A.
About 55 miles northwest of Rockwall is Prosper.
In November, 879 voters within the Prosper Independent School District approved a $710 million bond package by a nearly four-to-one margin, as the conventional wisdom dictates the region's explosive residential growth will continue.
Last week, the district issued the first tranche of the package, as well as some refunding bonds. The $102.7 million issue included $87.5 million of new-money school building bonds.
Southwest Securities Inc. was lead manager for the sale. Yields on the bonds, which are wrapped by the state's triple-A rated Permanent School Fund, ranged from 3.6% with a 5% coupon in 2016 to 5.18% with a 5% coupon in 2043. The bonds are callable at par in 2017.
Analysts have said the rapid influx of new residents is weighing on the school district's underlying credit.
Moody's rates the district's underlying credit at Baa1 due to "tremendous growth occurring in the district," which has led to "elevated debt burdens that are substantially higher than most Texas school districts."
Neither Standard & Poor's nor Fitch Ratings rates the underlying credit of the district.
Prosper officials exhausted a $135 million bond authorization from 2004 with a $72 million sale last August to begin the first phase of a second high school. Other proceeds from the bond package were used to expand the current high school, upgrade a stadium, and build two elementary schools and the first new middle school in the district in more than 100 years.
The formerly rural district began the current school year on Monday with about 3,300 students. Officials expect to add 600 students each of the next two years with continued growth through 2016.
Total enrollment is projected at between 40,000 and 50,000 in about 20 years once the land within the district reaches - or at least approaches - complete build out. Prosper ISD, which is about 35 miles north of Dallas, plans to build four elementary schools, a middle school, and second high school with proceeds from the new authorization.
Recent completion of an extension of the Dallas North Tollway puts the northernmost terminus of the heavily used road about one mile south of Prosper. The $5 billion SH 121 toll road is being constructed 10 miles south of Prosper. The 26-mile stretch will be the largest toll project ever undertaken by the state.
The total population of the school district, which is still about 70% agricultural and includes parts of Frisco and some areas in eastern Denton County, is currently about 10,000 residents.
Aside from the 2004 bond package and the one approved earlier this month, the only other school debt referendum ever approved by Prosper voters was in 1963 when a $320,000 bond was passed.
At the 1960 census, there were 41,247 people living in all of Collin County, which includes Prosper. Now it's one of the fastest-growing areas of the country with a population of nearly 700,000 that is up more than 42% since the 2000 census driven by growth in Frisco and McKinney.
Earlier this year, Frisco's population topped 100,000, which is more than triple the 2000 census figure of 33,714. Residential growth in McKinney hasn't been as staggering but considerable nonetheless, with a current population of almost 114,500 that is more than double the 55,000 residents at the start of the decade.
Nearby Plano is another example of suburban sprawl north of Dallas. While not expanding as rapidly as its smaller neighbors, Plano continues to grow with a current population of about 270,000, up 20% from the start of the decade.