DALLAS — Trustees of the Austin Community College District were expected on Tuesday night to approve a truncated sale of $33.5 million of Build America Bonds to build a campus that will serve a new area that joined the district in November.
Projects financed by the bonds will enable the central Texas community college district to provide services to residents of the Elgin Independent School District, which joined the multi-county ACCD last month. Elgin voters approved becoming part of the Austin district by a 60% margin on Nov. 2.
The debt will be issued by the Austin Community College District Public Facility Corp. The bonds will be supported by lease payments from the district to its facilities corporation.
The tranche was originally to have totaled $90 million, but the college district temporarily scaled back its plans after a lawsuit was filed challenging the attempt by another local school district to join it.
Voters in the Hays Consolidated Independent School District overwhelmingly approved joining the ACCD in November, but a lawsuit seeking to overturn the annexation election was filed last week in a San Marcos state district court.
The suit was filed shortly before the Dec. 10 deadline for contesting the vote. The Austin district said it became aware of the suit on Monday, after the original sales documents were completed.
The district intends to contest the lawsuit, said Jorge Rodriguez, managing director of Coastal Securities Inc., the district's financial adviser.
If successful in its defense of the election, the facilities corporation will quickly issue approximately $55 million of lease revenue bonds to build the new Hays County campus in Kyle, he said.
"We had an election challenge filed shortly before the planned sale, so we decided to go ahead with the Elgin project and defer the Hays County campus," Rodriguez said. "Hopefully it will be resolved soon, and we are confident of success."
Neil Vickers, the ACCD's associate vice president of finance and budget, said the bonds are supported by lease revenues on the new facilities rather than property tax revenues from across the district.
"The strategy is to correlate the new tax revenue stream to the new debt-service schedule as closely as possible, and the lease revenue bonds allow for that linkage," Vickers said.
The lease revenue bonds are rated AA by Standard & Poor's and Aa2 by Moody's Investors Service.
The district's general obligation debt is rated AA-plus by Standard & Poor's and Aa1 by Moody's.
The ACCD's outstanding debt totals $68 million of GO bonds and $118 million of lease revenue bonds. The district has no authorized but unissued debt.
JPMorgan is the senior underwriter. Others on the underwriting team include Cabrera Capital Markets LLC, Estrada Hinojosa & Co., Hutchinson, Shockey, Erley & Co., Frost Bank, and Raymond James & Associates Inc.
Bickerstaff Heath Delgado Acosta LLP is the district's bond counsel.
Proceeds from the shortened sale will be used to build a campus in Elgin to serve approximately 1,200 students. The new campus will be located on 98 acres of land the district purchased earlier.
In addition to the Elgin ISD, the ACCD serves the city of Austin and residents of Round Rock, Leader, Del Valle, and Manor independent school districts. Students who live in the college district pay lower tuition than non-residents.
Three school districts rejected annexations to the community college district in November.
The Austin district serves a population of almost 1.4 million. Its taxable property base is estimated at $93 billion. The property valuation is up 88% since fiscal 2005 due to annexations of several school districts and the inclusion of all of Austin.The annexation of Round Rock ISD in May 2008 added $12 billion to the tax base. The annexations of Hays CISD and Elgin ISD are expected to add another $4.5 billion.
