DALLAS — The Galena Park Independent School District plans to offer $18 million of unlimited-tax bonds in the competitive market today.
Officials said they hope so see an increase in the number of bids on the debt due to the district’s strong underlying rating coupled with the triple-A enhancement of the state’s Permanent School Fund.
James Brooks of Southwest Securities Inc., the district’s financial adviser, said he anticipates about five to 10 bids on the bonds, which are structured as serials or a combination of serials and term bonds with final maturity in 2034. The debt is callable at par in 2018.
“There’s been a bit of rally in the market and I feel pretty confident that we can get this deal done in a way that provides a good rate for the district,” Brooks said. “The district is in very good shape financially right now and they’re in the prime position for continued economic development being there in Harris County.”
Andrews Kurth LLP is bond counsel to the district, which is about 10 miles east of downtown Houston.
The taxable-assessed valuation of the district has more than doubled this decade to about $4.89 billion this year.
Moody’s Investors Service assigned its A1 underlying rating to the issue, and Standard & Poor’s doesn’t rate the credit.
Fitch Ratings assigned a AA underlying rating, citing a history of strong financial reserves “preserved by prompt action by management in response to a recent structural imbalance.”
Vikas Chaphekar, director of finance and budget, said the district’s general-fund balance was a negative $7.6 million for fiscal 2005.
But “some belt-tightening” led to a surplus of $1.9 million last year and a $9.3 million surplus this year, pushing the fund balance back in the black, according to Chaphekar.
Fitch listed the district’s large and growing industrial-tax base that reduces the impact of an above-average tax burden on residents, as well as limited capital needs and a mature residential tax base as credit strengths.
Yet another credit strength is the tax rate levied by the district for maintenance and operations, according to analysts. In 1964, Galena Park voters approved a combined maximum M&O and debt-service tax rate of $1.95 per $100 of taxable-assessed value. This allowed the district to keep its rate higher than other Texas school systems prior to 2007 when changes in the state funding took effect that lowered districts’ maximum levy by one third by this year. But Galena Park voters then approved a $0.07 rollback in that decrease last December, which increases the district’s taxing flexibility, according to analysts.
Unlike other fast-growth school districts elsewhere in Harris County, Galena Park’s enrollment has grown by just about 1% annually the past five years, and officials expect similar gains for the next few years.
David Hopkins, deputy superintendent of operations, said the district is relatively small at about 32 square miles and nearing complete build out. He expects the current enrollment of about 21,000 students to top off at 25,000 to 26,000.
Hopkins said proceeds from today’s sale will be used for a 140,000-square-foot addition to the district’s senior high school and renovations to other campuses.
This is the fourth sale from an $85 million bond package approved in 2005, and officials don’t anticipate bringing the the remaining $17 million to market for at least few years. Following this issue, the district will have about $242.2 million of debt outstanding.
