Alvin ISD Nets Double Upgrades As It Prepares To Fix Out Variable-Rate Debt

DALLAS — The Alvin Independent School District received upgrades of its underlying credit from both Standard & Poor’s and Moody’s Investors Service as officials prepare to remarket some variable-rate bonds into fixed mode.

Moody’s raised its rating to A1 from A2, citing the suburban Houston district’s “continued tax-base growth and healthy financial operations with ample reserves.”

Standard & Poor’s analysts said its upgrade from A to A-plus reflects the district’s “rapid tax-base growth and very strong financial performance.”

Alvin ISD, which is about 25 miles southeast of downtown Houston, has developed into a bedroom community during this decade with residential property accounting for about 64% of the tax base, according to Moody’s. The district’s taxable-assessed value averaged nearly 20% annual growth the past five years to $4.2 billion for fiscal 2009 and preliminary estimates show a slight decline in growth but still a strong 11% gain for next year to $4.6 billion, according to analysts.

The district ended fiscal 2009 with an unreserved general-fund balance of $35.4 million, or what Standard & Poor’s considers “a very strong 33% of expenditures.”

The district plans to fix out Series 2001B and Series 2004B variable-rate bonds to fixed-rate through a remarketing of the debt at some point in August. Following that transaction, the district won’t have any exposure to variable rate debt or interest-rate swaps, according to Moody’s.

Standard & Poor’s also affirmed a triple-A enhanced rating on the two series of bonds to be converted to fixed rate due to their backing by the state’s Permanent School Fund. Although the state suspended the gilt-edged bond-enhancement program earlier this year, bond issues already backed by the program remain so and retain their triple-A ratings.

Alvin ISD has a current enrollment of nearly 16,000 in 20 schools. Officials project continued enrollment gains of about 5% annually and the district may reach capacity by 2011, which may necessitate the need for an additional elementary school to open in two years.

The district has exhausted a roughly $135.8 million bond package approved by voters in 2005 and doesn’t have any authorized but unissued debt. Officials have indicated plans to hold a bond election of about $100 million in November, according to analysts.

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