DALLAS — The trustees of the Humble Independent School District decided to put a bond referendum of $244.9 million on the May ballot, although the rapidly growing suburban Houston district may need twice that amount to keep pace with annual enrollment gains of nearly 2,000 students.

“While virtually every part of the country has experienced a slowdown in the housing market, it’s all relative,” superintendent Guy Sconzo said. “We, too, have seen a drop in new-home construction, but that means we had 1,800 new students this year, as opposed to 2,200 last year. So again it’s all relative.”

A nearly 50-year-old district policy limits the district’s debt level to 7% of its taxable assessed value.

While the fiscal 2007 assessed value of the district of about $8.4 billion is more than double a decade ago, it allows for maximum debt of about $588 million, which capped any possible May bond package at about $245 million.

So when the bond-study committee presented the school board late last year with a bond package of about $303 million, which was down from a prior recommendation of nearly $380 million, there was no alternative other than paring that figure down.

Sconzo said the studies undertaken by the district showed the costs of the more pressing needs at just about $245 million. District voters will need to approve increasing the debt level, but that question won’t be on the ballot in a few months.

“We’re going to take this spring and next winter to study the implications of changing that 7% to the 10% state limit,” Sconzo said. “We want to talk to our financial adviser about other school districts that have the 10% threshold to see what their financial condition is and also see what the bond-ratings agencies feel about the increased level for our district.”

In a few weeks, the district is bringing $96.7 million of school building and refunding bonds to market in the fifth phase of a $342 million bond package approved in November 2005.

Sconzo said about $15 million to $20 million of the negotiated sale will be refunding bonds, and the district mandates savings of 4% from a refunding, which is expected to be achieved.

Morgan Keegan & Co. is lead manager for the issue and First Southwest Co. is the financial adviser to the district. Vinson & Elkins LLP serves as bond counsel.

The district plans to issue the sixth and final phase of the 2005 authorization sometime next winter, according to the superintendent.

The May bond package includes about $100 million for the construction of new schools and land acquisition for future campuses. Other projects to be addressed include the purchase of about 80 new buses and $23.5 million of technology upgrades.

Sconzo said the district’s sixth high school is set to open in August 2009.

Humble ISD’s current enrollment of about 33,000 is expected to reach nearly 49,000 in 10 years based on relatively modest growth estimates of about 4% annually.

The district carries underlying ratings of A-plus from Standard & Poor’s and A1 from Moody’s Investors Service.

Standard & Poor’s analysts said the rating reflects the district’s participation in the broad Houston economy, strong financial performance, and “sizable property tax base that has experienced consistently solid growth.”

The debt burden and capital needs offset the strengths, according to analysts.

Moody’s analysts said the “district’s financial flexibility is limited because it must rely on assessed valuation growth to provide increased property tax revenues.”

Analysts also expect the assessed valuation growth and “management’s conservative financial practices will offset substantial future debt plans” despite a highly leveraged debt profile. 



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