DALLAS - The Northwest Independent School District in Texas is coming to market next week with the first slice of a $260 million bond package approved in November to build more schools for a student body growing by about 1,000 students a year.
The suburban Fort Worth district plans to offer $65 million of unlimited-tax school building bonds Tuesday through a negotiated sale led by RBC Capital Markets. Morgan Keegan & Co. and Southwest Securities Inc. are co-managers.
"We'll have the board sign a parameter order and may sell the bonds Tuesday," after the observance of the Memorial Day on Monday, said chief financial officer Jon Graswich. "But we may see slightly better rates after Tuesday, as it appears a lot of traders tend to take off around holidays, and we want to make sure we're pricing in a full market to assure the best rate for our taxpayers."
Graswich said the district's annual enrollment growth, which was hovering near 12% to 13% the past few years, is projected at around 8% for next year.
"Housing starts haven't stopped but have certainly slowed somewhat, and kids are still showing up in Texas," he said.
A study released this week by housing market research firm Metrostudy Inc. ranked the Dallas-Fort Worth metropolitan area as second in the nation in the number of new-home sales and starts for the 12 months ended March 31, trailing only the Houston area.
David Brown of Metrostudy's Dallas office said the North Texas housing market has slowed but remains stronger than other parts of the country.
"We still have jobs here, people continue to move here, and our economy is much stronger, which has led the consumer to have a little more confidence, so people continue to buy houses here," he said.
Northwest ISD is about 15 miles north of downtown Fort Worth and serves students at 19 campuses in 14 municipalities across Tarrant, Denton, and Wise counties. Officials still project the current enrollment of 13,138 students to nearly double in the next five years or so. The total student population for the 2004-05 school year was about 7,500.
Last fall's bond package was approved by about 72% of district voters and includes plans for seven elementary schools, a middle school, technology upgrades, and renovations to existing facilities. Prior to the vote, superintendent Karen Rue said "with demographics indicating that the district could reach 90,000 students by 2027, it is plausible that a bond election could be held every three years, with two new schools opening each year for the next 20 years."
First Southwest Co. is the financial adviser to the school system and McCall, Parkhurst & Horton LLP is bond counsel.
Proceeds from the Series 2009 bonds, which are structured as serials maturing in 2017 through 2034, will be used for a new elementary school and new middle school. The bonds won't be backed by the state's triple-A rated Permanent School Fund, which is still suspended due to a decline in its value.
Still, Graswich expects strong demand for the bonds and a low rate due to the district's strong underlying ratings. Fitch Ratings rates the credit AA-minus, while Moody's Investors Service rates it Aa3.
Moody's said the rating reflects a "rapidly expanding tax base and established trend of notably strong general fund reserves." Analysts also said the district's high debt burden will be mitigated by tax-base growth.
Following next week's sale the district will have about $517 million of debt outstanding. Its fiscal 2009 taxable assessed value of $9.44 billion is nearly double the $4.8 billion in 2005.
