DALLAS — The Forney Independent School District plans to bring debt to market next week to complete construction of its second high school to accommodate a rapidly growing enrollment.
The district, which is about 20 miles east of Dallas, will offer about $34.7 million of unlimited-tax school building bonds through a negotiated sale with Southwest Securities Inc. and RBC Capital Markets as co-managers.
Chief financial officer Dwayne Thompson said the school board will meet Monday to set the parameters for the sale and officials expect the deal to price later next week.
“We need to acquire these funds and complete the construction of the high school, so despite all that’s transpired in the market we hope to get the bonds sold,” he said.
Only a few Texas issuers — mostly utility districts and a couple of small towns — have priced bonds the past few weeks, while many deals were delayed, postponed, or canceled, as the national financial crisis unfolded.
But on Wednesday, the Frisco Independent School District sold $100 million of school building bonds and Coppell priced $20 million of tax and revenue certificates of obligation, possibly signaling a beginning to the end of the lethargy in the Texas municipal market.
Yields on the Frisco ISD bonds, which are backed by the state’s triple-A rated Permanent School Fund, ranged from 4.9% with a 5% coupon in 2017 to 6.25% with a 6% coupon in 2038.
Frisco ISD assistant superintendent for facilities and finance Richard Wilkinson said last week that the growing district 20 miles north of Dallas needed to sell the bonds “to build new schools in a timely fashion for our kids.”
And the Forney ISD faces the same situation, as its student population has more than tripled the past decade to about 7,410 this year. Thompson said enrollment growth has slowed a bit but remains strong.
The district’s bonds, which also will be backed by the triple-A rated PSF, are structured as serials reaching final maturity in 2029.
This sale exhausts a $70 million bond package approved in May 2007. The district still has about $52.7 million of authorized but unissued debt remaining from a 2006 bond package with no plans to sell more within the next 12 months.
First Southwest Co. is the district’s financial adviser and McCall, Parkhurst & Horton LLP serves as bond counsel.
Fitch Ratings assigned an A underlying rating to the issue and affirmed the rating on the district’s $214 million of parity debt outstanding
Analysts said the rating reflects the district’s “good financial performance despite ongoing operating and capital pressures associated with very rapid enrollment growth and historically very strong tax base growth.”
Some mitigating credit factors include a “very high debt levels with slow amortization and higher than average taxpayer concentration.” One power plant accounts for nearly 18% of the taxable-assessed value, according to analysts, who also said “healthy reserves will be integral to maintaining credit quality.”
The district’s current taxable assessed valuation has climbed 68% to $2.25 billion from $1.34 billion in 2005, as the population within the school district nears 36,000 up from 23,326 for fiscal 2005.
Fitch said the less than half of the district is currently developed.
In May, Standard & Poor’s raised the district’s underlying rating two notches to A-plus from A-minus due to continued tax-base growth and diversification and a consistently strong financial performance.
