A bond rush in Collin County, Texas
DALLAS – By the time its outstanding bonds reach final maturity in 2036, suburban Collin County, Texas, could boast a population rivaling that of neighboring Dallas County, the largest of 13 counties in the Dallas-Fort Worth Metroplex.
Between 2010 and 2015, Collin County, northeast of Dallas, saw its headcount soar 59% to 885,241. In March, the U.S. Census Bureau estimated the county’s 2017 population at 969,603. That compares to a 2010 Dallas County census of 2.4 million. If current trends continue, Collin is expected to surpass Dallas County in population by 2050, officials say.
If Collin County voters approve a $750 million general obligation bond proposal Nov. 6, the cities on the fringes would be connected by a new loop that could accelerate population and economic growth.
Driving the surge is a mix of corporate headquarters, high technology, low taxes, upscale housing, good schools and an array of shopping and leisure activities that attract young professionals in the peak of their careers.
“Collin County has an exceptionally healthy economy and tax base, which are consistent with its Aaa rating position,” Moody’s Investors Service wrote in a recent report. “Total full value ($124 billion) greatly exceeds the U.S. median, and increased dramatically from 2013 to 2017. Furthermore, median family income equates to a robust 151.3% of the U.S. level. Lastly, full value per capita ($132,011) is much stronger than other counties nationwide.”
The county seat McKinney, and the cities of Plano, Frisco and Allen are among the fastest-growing in the nation. The semi-rural towns of Prosper, Celina, Anna and Melissa are facing envelopment by the suburban boom.
Connecting the Plano, Frisco and McKinney is a network of toll roads built and managed by the Plano-based North Texas Tollway Authority, one of the state’s largest bond issuers.
Frisco’s so-called “$5 Billion Mile” along the Dallas North Tollway represents $5.4 billion in investment, either announced or under construction. The stretch of tollway is home to commercial, office, and residential space, as well as other large developments such as the Dallas Cowboys football franchise's headquarters and training facilities.
Keeping pace with growth is a tall order for the county. The cities and the school districts within its boundaries are expected to continue fueling heavy bond issuance in coming years.
Voters in the Frisco Independent School District will consider $691 million of bonds for capital projects in the November election, including a new high school, two middle schools, and land for future campuses as student population grows at the rate of about 2,000 each year.
Bond money would also bring some of Frisco ISD’s older, aging campuses up to date so that they are more energy efficient and comparable to newer schools.
In a related proposal, Frisco ISD voters will consider a maneuver known as a “tax swap” designed to provide more operating funds without raising taxes.
The Tax Ratification Election proposal would increase the maintenance and operations tax rate by 13 cents. FISD would then decrease the interest and sinking tax rate for its bond program by 15 cents, resulting in a 2-cent reduction to the combined property tax rate. That would bring FISD’s combined tax rate from $1.46 per $100 valuation to $1.44 per $100 valuation, the second lowest school district tax rate in Collin County.
The tax swap moves pennies from the portion of the tax rate that pays for debt to the portion that pays for daily operations while lowering the overall tax rate. For FISD, it would generate millions of dollars in additional funding for day-to-day expenses while financing infrastructure needs.
Frisco ISD’s 2018 bond election comes just four years after district voters approved $775 million of bonds with a more than 77% margin.
Serving an estimated population of 285,000 and a tax base that includes the new headquarters of Toyota North America and Liberty Mutual Insurance Co, Frisco ISD boasts median household and per capita effective buying incomes at 180% and 145% of national levels, respectively.
“The district's total $35.6 billion market value in 2018 is extremely strong, in our view, at $124,809 per capita,” according to S&P Global Ratings, which gives the district an underlying rating of AA-plus. “Net taxable assessed value grew by 35.6% since 2016 to $35.6 billion in 2018.”
The district’s population has grown eight-fold since the 2000 U.S. Census.
“Given ongoing commercial and residential development, we believe that the district's tax base will grow at a double-digit pace for the next few years,” S&P said. “Despite continued growth stress, finances remain very strong, in our view, due to ongoing revenue growth and conservative budgeting.”
Voters in the county are reliably supportive of local bond issues, which have come with increasing frequency in recent years.
In May 2016, Plano ISD voters passed a $481 million bond proposal to help the district accommodate growth. The same day, voters in the nearby Anna ISD on the fringes of the population boom approved $155 million of bonds in anticipation of projected growth.
Much of that growth could come from the major transportation project before county voters next month.
Texas transportation officials have estimated that the county will need more than $3 billion in roadway expansion and construction over the next decade to deal with increased traffic and rapidly growing cities and towns.
Collin County voters will decide whether to take on $750 million of debt to upgrade existing roadways, including bridges and access roads. The proposal is the largest in the county’s history, reflecting the increasing need for transportation infrastructure.
The bond package would provide $600 million to finance a Collin County Outer Loop that would convert existing roadways into a non-tolled highway that links up with the Dallas North Tollway. While studies have shown the project to be a long-term economic boon, they acknowledge that businesses along the route will take a financial hit during construction.
Upon completion, the 50-mile highway would tie into plans to build a 240-mile regional outer loop encircling the Dallas-Fort Worth area known as Texas State Highway Loop 9.
The cities of McKinney, Plano, Frisco, Farmersville and Anna and the town of Prosper support the county transportation proposal that would provide a high-speed link.
Backers of the road bond proposal point out that the county’s tax rate would not increase if the bonds are approved. With property values rising, the county’s tax rate has been trimmed five times in the last five years.
Opponents have generally complained about the route the outer loop would take and the loss of property in its path. But no organized effort has surfaced so far.