DALLAS — The Pine Tree Independent School District in Texas hopes to issue $20 million of taxable general obligation bonds under the federal qualified school construction bond program if voters approve the proposal in May.
The district, which is located in the East Texas city of Longview, has set the election for May 8.
Ed Moore, a senior vice president with Southwest Securities Inc., the district's financial adviser, said the taxable debt would save the school system $6.5 million in debt service on the 25-year bonds.
Moore said that with the QSCB program, Pine Tree ISD would pay $30.5 million in debt service on the $20 million of bonds. Debt service on the same amount of conventional tax-free bonds would be around $37 million.
The bonds would be structured with a balloon payment of $7.1 million in 16 years. Moore said the district would make annual payments to a debt-service account to cover that payout, earning an estimated $2.1 million in interest. The remainder of the debt would mature in the final nine years.
If voters approve and the district qualifies for a QSCB allocation, it would receive a direct federal subsidy of the interest on the bonds.
Proceeds would finance a new 7,500-seat football stadium to replace a 1,000-seat stadium built in 1940, renovations to classrooms at Pine Tree High School, and maintenance projects at several district facilities.
The district's GOs have an unenhanced rating of A2 from Moody's Investors Service, but carry a triple-A rating with coverage by the state's Permanent School Fund bond program. Moore said the proposed bonds would qualify for PSF enhancement.
Approval of the debt would raise the district's property tax rate from the current $1.38 per $100 of assessed property value by about six cents.
A recent extension of the QSCB program, which is part of the federal stimulus effort, provides $11 billion to finance construction, rehabilitation, and repair of public school facilities and land acquisition for new schools.
The Texas Education Agency will distribute the state's allocation of $547.7 million of QSCBs on a first-come, first-served basis, said Gary B. Marek of TEA's school finance division.
"We are working on the allocation plan, and hope to have the guidelines developed by the end of April," he said. "When we notify a district of its allocation, it will have one year to issue the bonds."
Marek said the agency in 2009 originally set a deadline for selling the bonds within 180 days after approval, but the period was lengthened due to the sluggish bond market last year.
Eighteen large school districts in Texas received direct allocations for $467 million of the taxable bonds, according to Marek.
Pine Tree ISD submitted its request for an allocation of QSCBs to the TEA on March 31.