DALLAS — School issues dominate this week’s relatively light docket in Texas, including a $106 million offering from a scandal-plagued district in South Texas.
In the largest issue of the week, the Pharr-San Juan-Alamo Independent School District plans to bring $105.8 million of bonds to market through a negotiated sale led by Southwest Securities Inc. Estrada Hinojosa & Co. and SAMCO Capital Markets are co-managers.
RBC Capital Markets and First National Bank are co-financial advisers, and Ramirez & Guerrero LLP serves as bond counsel.
Proceeds from the bonds, which come to market backed by the state’s triple-A rated Permanent School Fund, will be used for three new elementary schools, one new middle school, replacement buildings at elementary schools, and expansion of all three high schools.
This sale exhausts the entire authorization approved by voters in May. The district serves about 30,300 students at 39 campuses. Enrollment is up 41% since the start of the decade, and officials project continued growth to about 35,000 students in 2013.
Moody’s Investors Service assigned an underlying rating of A2 to the sale, while Standard & Poor’s assigned an A-plus. The district’s financial position is strong due to conservative budgeting practices and increasing levels of state aid, which accounts 76% of revenue and 72% of debt service, according to analysts.
The South Texas border district has been ensnarled in a federal bribery and extortion case for over the past year.
At least two school board members and a former superintendent were arrested last year on charges they accepted bribes in the form of hotel rooms and tickets to major sporting events in return for contracts on bond-financed projects. The trial of the prominent El Paso contractor that allegedly provided the bribes through an intermediary is set to begin next month. All parties involved have pleaded not guilty.
First Southwest Co. is the lead underwriter for upcoming negotiated sales of school building bonds by five smaller Texas school districts. Most of the bonds will be wrapped by the triple-A rated PSF.
The Cooper Independent School District plans to offer $5 million, the Hooks Independent School District will issue $3.8 million, the Muleshoe Independent School District will offer $3 million, the Dilley Independent School District expects to price about $2.9 million, and the Lasara Independent School District will offer $1.75 million.
Cooper ISD serves about 850 students in three schools in northeast Texas. Officials plan to use proceeds to fund construction of a new elementary school to replace an aging facility.
Also in the northeast, Hooks ISD has a total enrollment of 1,000 students. Proceeds from the bonds will fund renovations to the junior high school and construction of a vocational facility at the high school.
Muleshoe ISD in the West Texas panhandle serves about 1,500 students in four schools. Lasara ISD has a total student population of about 315 in two schools in South Texas, including a high school that just opened during the second semester of the 2007-2008 school year and will have its first graduating class in 2011.
Dilley ISD has five schools with roughly 900 students about 71 miles southwest of San Antonio.
Meanwhile, Pasadena is bringing $21.6 million of general obligation bonds to the competitive market today following an upgrade from Standard & Poor’s to AA-minus. Fitch Ratings already rates the city’s credit at AA-minus.
Southwest Securities is the financial adviser to the rapidly growing suburb about 15 miles southeast of downtown Houston. Andrews Kurth LLP is bond counsel.
Analysts said the upgrade is due to “consistently strong financial management practices.”
Fitch said the rating reflects a solid tax base within the Houston-area economy, sound management characterized by long-term capital improvement planning and five-year budget forecasting, moderate debt, and adequate reserves.
The city’s population of nearly 155,000 is up about 10% since the 2000 Census tally of 141,674
Proceeds will fund a new fire station, as well as upgrades and expansions to streets, parks, and drainage facilities.
