DALLAS — Texas voters will consider approving $6.7 billion of new bond debt in 83 local elections on Saturday.
All but 11 of the bond proposals come from school districts. Nine cities, one community college district and a hospital district are also seeking bond approval, according to the
Fort Worth leads cities with a $290 million proposal for a variety of civic projects.
Among independent school districts, Cypress-Fairbanks in the Houston area is tops with $1.2 billion of bond requests, followed by Frisco north of Dallas at $775 million, Arlington between Dallas and Fort Worth at $663 million, Northside in the San Antonio area at $648 million, and Pflugerville north of Austin at $287 million. Ten school districts are seeking more than $100 million.
Laredo Community College District is seeking $100 million for renovations, technology and new buildings.
Joe Smith, a former school superintendent and consultant who created the website TexasISD.com, noted that five districts account for more than 65% of the dollar volume on the ballots.
"School districts in the fastest growing areas of our state must keep up with the growth and it should not be a surprise that they are seeking funding for these projects," Smith said.
"Renovating facilities that are worn out is the major issue in many of the smaller districts," Smith told The Bond Buyer. "I assume the growth of the tax bases in these fast-growth districts are creating the necessary capacity for servicing these bonds."
Stuart Snow, chief financial officer for Cypress-Fairbanks, the state's third-largest school district, said the school board decided to wait seven years after its last bond election before calling this one. Previously, the district went to the voters about every three years.
"We felt that with the downturn in the economy we couldn't ask voters for that authorization, but our enrollment continued to increase," Snow said.
The current proposal is the largest in the district's history, but Snow said he's cautiously optimistic voters will approve.
"You're going to have opposition for anything you do, but overall, we're getting a pretty good feeling that the community sees the need and is willing to invest in the schools," he said.
If the proposal passes, Snow said the district could enter the bond market as early as July. However, the district could wait until October if it decides to combine the new money with a potential refunding opportunity on bonds that are callable next February, he said.
"If we don't do the refunding, it would probably be an August sale," he said.
The district repays its bonds over 25 years even though the life of buildings is considered to be much longer. The district never finances bonds for a longer period than the life expectancy of the capital improvement.
As of audited financials for June 30, 2013, Cy-Fair's total amount of principal debt for schoolhouse bonds was $1.74 billion. The district last went to market on March 13 with $155 million of bonds. During fiscal year ended 2013, $220 million bonds were retired.
The district carries underlying ratings of AA-minus from Standard & Poor's and Aa2 from Moody's Ratings, but its bonds are rated triple-A standing with backing from the Texas Permanent School Fund.
David Tiffin, vice president for public finance at the underwriter Baird, said that the fact that local tax bases are growing again after shrinking in the Great Recession allows districts to propose bond issues that will not require tax increases.
The explosive growth of Texas' population adds the equivalent of a Fort Worth ISD to the state every year, Tiffin said.
"It doesn't appear that it's going to slow down," he said. "You're going to see more and more needs."
Ajay Thomas, managing director at Baird, said that interest rates, though more volatile than a year ago, are still low enough to encourage districts to get their bonds priced at the first opportunity.
In North Texas, the fast-growing Frisco ISD's bond proposal has drawn opposition from anti-tax activists that include the Center for Local Governance at the Texas Public Policy Institute.
Jess Fields, a senior analyst with the Center, editorialized against the bonds in The Dallas Morning News, calling the district's current debt load "enormous."
"Frisco ISD has borrowed nearly $1.4 billion on the backs of taxpayers. And that doesn't include interest, which is estimated at over $1.2 billion," Fields wrote in the April 27 opinion piece. "Combine the principal and interest amounts owed, and the district's total outstanding debt burden is nearly $2.6 billion, or about $55,988 per student enrolled."
Frisco bond proponents note that, on a percentage basis, the district is the fastest growing in the country, increasing enrollment from fewer than 2,000 students in four schools in 1993 to 46,000 in 56 schools today.
In Pflugerville, some groups criticized the school board's decision to include $25.8 million for a regional stadium in the district's largest bond election. Pflugerville voters have never turned down a school bond. District officials point out that they have not asked voters for a bond since 2007.
A 54% majority of voters in suburban Houston's Katy ISD in November rejected a 14,000-seat high school stadium. Education advocate and bond critic George Scott told the Houston Chronicle that including the stadium in the bond proposal was "institutionally arrogant."
In the Allen ISD neighboring Frisco ISD, a $60 million bond-funded stadium opened in 2012 has been closed since Feb. 27 due to cracking concrete. The stadium builder has said that the district's taxpayers will not be on the hook for the cost of repairs, but the stadium is closed indefinitely.
To assist voters in advance of this week's election, Texas Comptroller Susan Combs launched a searchable database tracking public school construction costs for the last five years.
"Texas' rapid growth has brought tens of thousands of new school-aged children to our state, leading to huge expenses for school construction — more than $14 billion in the past seven years," Combs said in a prepared press statement. "There is no legislative standard for these costs and no required reporting mechanism, so we are shining a light on this spending so you can hold your local officials accountable for it."
