DALLAS Northside Independent School District, the fourth largest school district in Texas, plans to issue $125 million of general obligation bonds as it prepares to ask voters for another $648 million to keep pace with growth.
The negotiated deal is expected to price April 22 through senior manager Stifel, Nicolaus & Co. with Raul Villasenor, senior vice president of First Southwest Co. as financial advisor. Oscar R. Cardenas, Northside deputy superintendent for business and finance, is in charge of planning for the issue.
The bonds will come in two tranches. The first will be a $45 million fixed-rate series. The second will be $80 million of variable rate bonds.
The bonds carry underlying ratings of Aa1 from Moody’s Investors Service and AA-plus from Fitch Ratings. Standard & Poor’s does not rate the issue.
With a guarantee from the Texas Permanent School Fund, the bonds will enjoy a triple-A rating that will lower finance costs for the district. Outlooks are stable.
The district, which includes part of San Antonio, typically adds two to three schools a year. Northside serves the rapidly growing northwest portion of Bexar County and surrounding areas, with a 2014 population of about 578,000.
“The district has maintained strong financial performance despite the pressures associated with sustained enrollment growth and state funding cuts,” wrote Fitch analyst Rebecca Meyer. “The district completed fiscal 2013 with a sound $30 million operating surplus after transfers representing 4.5% of spending. Results were driven largely by enrollment-based revenues mitigating state funding cuts and supporting new school openings.”
The value of the district’s $35.4 billion tax base has grown 85% since fiscal 2006, mirroring growth in the greater San Antonio area, analysts said. Based on new residential and commercial development underway, officials expect between 4.5% and 5.5% TAV growth in fiscal 2015, which Fitch considers consistent with current growth patterns and regional trends.
“Given that the district is only about 65% built-out, and much of the major road infrastructure in the district is in place, the prospects for continued growth are favorable,” Meyer wrote.
The district expects to ask voters for $648 million in additional authorization in May to address capital needs.
