The Katy Independent School District this week will sell the first $200 million tranche from a $460 million bond package approved by 51.7% of voters earlier this month.
The negotiated sale is expected to include $155 million of Build America Bonds, $43.7 million of conventional tax-exempt general obligation bonds, and $6.2 million of refunding bonds.
School trustees authorized the BAB component after the Texas Education Agency approved special rules for the use of the stimulus bonds.
Because the deadline for selling BABs is Dec. 31, TEA said last week it would waive the normal Permanent School Fund guarantee timelines to enable districts to sell BABs before the program expires.
District superintendent Alton Frailey said the stimulus bonds would not have been available if voters had rejected the bond package on Nov. 2.
Frailey said if the bonds had been voted down, the district would have sought a May 2011 election on another proposal.
“This is a win-win situation for the Katy taxpayers, which would not have been possible if the bond would not have passed this month,” he said. “Essentially, a May passage of the bond would have very likely resulted in a higher tax rate than what the taxpayer will now see.”
District officials said the use of BABs would cut debt-service costs by $97 million over the life of the bonds.
Bill Moore, chief financial officer at the ISD, said the lower-than-expected interest costs will result in a maximum property tax rate of 42 cents per $100 of assessed value, below the projected rate of 44 cents in fiscal 2013 and 2014.
Located about 30 miles west of downtown Houston, Katy ISD has seen its student population grow by more than 10,000 in the past four years.
Proceeds from this week’s sale will finance construction of new facilities, expansions and renovations of existing facilities, technology upgrades, and bus purchases.
The district’s $949.2 million of outstanding GO debt is rated AA by Standard & Poor’s and Aa2 by Moody’s Investors Service. The debt is enhanced to triple-A by the state’s Permanent School Fund.
