DALLAS - The Austin Community College District takes a major step toward its regional expansion plan this week by offering $120 million of lease revenue bonds for construction of its new Round Rock campus.

The negotiated deal is led by Wachovia Bank NA, with Estrada Hinojosa & Co., Cabrera Capital Markets, First Southwest Co., and RBC Capital Markets as co-managers.

Coastal Securities serves as the district's financial adviser, with Bickerstaff Heath Delgado Acosta as bond counsel.

The ACCD won an upgrade from Standard & Poor's last week on its long-term credit from AA to AA-plus, "reflecting a trend of good financial performance and an increase in the overall resources available to the district."

Moody's Investors Service maintained its Aa3, while Fitch Ratings did not issue a rating. Fitch has applied a AA credit on previous general obligation issues.

The district has applied for insurance and will decide on whether to insure the debt on the day of issuance.

Previous bond issues came from a 2003 voter authorization that has been exhausted.

The lease revenue bonds will get about 60% of their backing from the Round Rock Independent School District, which serves the rapidly growing Williamson County suburb north of Austin.

Round Rock joined the district in May with approval of 64% of the voters after land had already been donated to the community college. The Round Rock ISD's entire tax base now overlaps the ACCD's. The Round Rock district should add more than $12 billion to the estimated $90 billion ACCD tax base by 2010, according to Standard & Poor's.

By joining the district, Round Rock lowered its students' tuition from $118 per credit hour to $39.

Austin Community College enrollment from Round Rock grew 40% from 2002 to 2006, making it the top choice of area high school graduates pursuing higher education.

The Texas Education Agency predicts the number of students within the Round Rock ISD will reach 60,000 by 2015.

The new Round Rock campus, serving 12,000 students, will be the largest in the ACCD with 250,000 square feet adjacent to a new Texas State University north Austin campus and a Texas A&M University Health Sciences Center. The area, known as the Round Rock Higher Education Center, would take 10 to 15 years to complete and would add $1.6 billion to Round Rock's tax base, officials say.

The Austin-based TSU System this week is also offering $64 million of bonds, some of which will finance the north Austin campus.

With competition from A&M, the University of Texas is also considering building its first Austin-area medical campus. UT's medical branches are concentrated in Houston, Dallas, and Galveston.

The ACCD's construction plans call for five multistory buildings with surface parking. The project will initially serve 5,000 students and later expand to 12,000. The district has already acquired 60 of the 80 acres for the site and is negotiating for the rest.

The campus would offer courses in health technology that would serve a number of medical centers in the area, including Seton Medical Center Williamson. Training would also be provided in computer sciences that would serve Dell Corp., the major area employer, as well as automotive technology and building construction. The district is running an ad campaign featuring students who transferred their two-year Austin Community College credits to UT for their four-year degrees.

Meanwhile, the ACCD board is preparing for further expansions beyond Austin's borders. At this month's meeting, the board approved a master plan that calls for possible purchase of land in Williamson County's Leander area, as part of its "land-banking" strategy in high-growth areas. While there is no timeline or resources dedicated for a Leander campus, the college is developing contingency plans. Leander Independent School District voters agreed to join the ACCD in 1985.

Created by voters on Dec. 9, 1972, the ACCD has grown steadily through annexation. Banned legally from promoting annexation, it relies on petitioners from local school districts to call for elections to join. The Manor Independent School District east of Austin joined in 1998, followed by the Del Valle Independent School District, southeast of the city, in 2004. Portions of Austin that had not originally joined agreed to do so in 2005. Round Rock ISD was the last to join.

The district now covers 799 square miles with a population of more than 900,000.

In a report on the state's 28 community and junior college districts last year, Standard & Poor's noted that "Texas community colleges are unusual among their U.S. peers in having the legal ability to issue both property-tax supported debt and debt secured by a pledged stream of tuition, fees, or auxiliary revenues."

Eleven of the rated Texas community colleges have both GO and revenue published ratings, including the ACCD.

Of the 19 districts for which Standard & Poor's maintains GO ratings, three are rated AAA, 10 are in the AA category, and the remaining six have debt in the A range. Since 2002, Standard & Poor's has not downgraded any Texas community college revenue ratings and has upgraded seven revenue bond ratings.

"From a GO perspective, the favorable credit evolution of community college districts has been largely attributable to two factors: strong property tax-base growth, and solid financial position," analysts wrote. "Community college districts that have received upgrades in the past few years benefit from their location in rapidly expanding metropolitan areas, which boosts their property tax base. In addition, the growing tax base provides a significant degree of financial flexibility, as districts can increase their property tax revenues while maintaining relatively low tax rates."

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