DALLAS — The Spring Branch Independent School District in Texas will continue its 10-year capital improvement program with proceeds from Tuesday’s competitive sale of $75 million of general obligation bonds.
The tranche is the fourth sale from a $597.2 million authorization approved in November 2007 by voters in the 41-square-mile district located 10 miles west of downtown Houston.
With the sale, Spring Branch ISD will have sold a total of $500 million from the 2007 vote, leaving $97.2 million of authorized but unissued bonds, said Karen Wilson, the district’s assistant superintendent for finance.
“We are estimating the next bond sale will be in early to mid-2013,” Wilson said. “We time the issues to sell bonds to finance projects as the projects come on line.”
Spring Branch ISD bonds have underlying ratings of Aa1 by Moody’s Investors Service and AA from Standard & Poor’s. The district’s GO debt, which will total $760 million with the sale, is enhanced to triple-A with coverage by the state’s Permanent School Fund.
First Southwest Co. is financial advisor to the district. Andrews Kurth LLP is bond counsel.
Drew Masterson, managing director in First Southwest’s Houston office, said the district is a strong credit based on its own assets.
“When we add the triple-A rated PSF on top and provide the nice block sizes that come with a $75 million issue, we are expecting an outstanding sale,” Masterson said.
“Even with the high volume this week, we expect strong demand for a highly rated credit such as Spring Branch ISD,” he said.
The district is making good progress on its 10-year facilities upgrade program, Wilson said. Most of the work is related to replacement or upgrades at existing facilities, she said.
“This is a well-established district, bounded by Houston [Independent School District] and others,” she said. “We don’t expect a great deal of enrollment growth because the area is built up, but some of our facilities we have been replacing are 60 years old.”
Current enrollment is 32,500 and is expected to reach 33,500 by 2020.
The facilities upgrade plan was developed and refined over two years by a citizens committee before the district called for the 2007 election. It was the district’s first bond proposal since 1999.
The 2007 facilities program included replacement of 12 elementary schools with new campuses and major work at 46 other facilities.
“We are well under way with most of the upgrades,” Wilson said. “We have a schedule of when major equipment needs to be replaced as we progress.”
Several schools with wings built around a central area are being remodeled to provide more secure campuses, Wilson said.
“As our superintendent says, we want the school buildings to reflect the excellence in education within their walls.” she said.
The first issue from the 2007 authorization was $195.7 million in early 2008. The district’s $125 million sale in 2009 and $142.7 million sale in 2010 included a total of $150 million of Build America Bonds, Wilson said.
“BABs were a very good program for Spring Branch ISD,” she said. “They definitely helped keep down our interest costs.”
Spring Branch ISD’s assessed property values total $18.8 billion in fiscal 2012. Assessed valuations have risen at an average annual rate of 5.2% over the past five years, despite a 1.7% drop in fiscal 2011 due to a soft housing market in the mostly residential district.
Total revenues in fiscal 2010 of $371.5 million included $242.2 million from the local property tax and $43.7 million in state grants and funding.