San Antonio School District Readies $130M Refunding

DALLAS — The Northside Independent School District in San Antonio is planning to sell nearly $130 million of general obligation refunding bonds before the end of the month in variable-rate mode.

Raymond James is the senior manager and remarketing agent on the deal, First Southwest Co. is financial adviser and Fulbright & Jaworski is bond counsel.

The NISD bonds will be issued in two series. Series 2011 is expected to be $45 million, and Series 2011A is pegged at $84 million. The rate mode will be set by Raymond James. District voters last year approved a $535 million bond program to build new schools and improve existing facilities amid rapid growth.

Since the previous bond election in 2007, Northside has become the fourth largest school district in Texas. Through the recession that began in 2007, it continued to add 3,000 students every year, officials said. Half of all new homes built in Bexar County in that time were in the NISD. Within three years, it expects to surpass enrollment of 100,000 students.

The bonds, to be priced through negotiation, will carry triple-A ratings because of their guaranty by the Texas Permanent School Fund.

Underlying ratings are AA-plus from Fitch Ratings and Aa1 from Moody’s Investors Service. Standard & Poor’s last rated the district’s underlying credit in August, giving it a AA.

Northside has $1.66 billion of unlimited-tax debt outstanding, according to Fitch analyst Steve Murray.

“Despite pressures associated with consistent enrollment growth, financial performance has been strong as evidenced by ample general fund balance reserve levels,” Murray wrote. “For fiscal 2010, the district added about $2 million to total fund balance, ending the year with nearly $143 million, or 22%, of spending. Of this amount, $53 million remains undesignated and nearly $37 million is designated for new facility startup costs.”

Taxable assessed valuation growth has slowed in the last two fiscal years. At around $32 billion for fiscal 2011, the NISD’s taxable assessed valuation has grown at a compound average annual rate of 10.8% over the last five fiscal years, Murray wrote. That is up 68% from $19 billion in fiscal 2006.

“Given that the district is only about 50% built out, and much of the major road infrastructure traversing the district is in place, the prospects for continued growth are good,” Murray said.

Like other districts in the state, Northside is bracing for major cuts on the operating side as the Legislature nears completion of its budget process. House and Senate versions of the school finance bill would cut funding to local districts between $4 billion and $8 billion.

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