DALLAS — Voters in the South San Antonio Independent School District will head to the polls this fall to weigh in on a $62 million bond package to update aging facilities.
The school board plans to form a committee to outline specific projects to be addressed with bond proceeds. Some trustees want to use the entire bond package to renovate the district’s lone high school, which is more than 50 years old, while other seek a more even distribution of the funds across all 15 campuses.
Sterne, Agee & Leach Inc. is the financial adviser to the district, which has a total enrollment of nearly 10,000 students.
Richard Acosta, senior vice president of Sterne Agee, said the specific projects to be addressed by the bonds “are still being hammered out,” but he expects there to be a single proposition on the ballot.
David Landeros, the district’s executive director for business and financial services, said the staff is meeting next week to finalize specific projects.
District voters rejected a $37.2 million bond package in November 2006, but approved a referendum of the same amount the following May after trustees revised projects to be addressed to include more funds for athletic facilities and upgrades at some schools to comply with the Americans With Disabilities Act.
The district sold all the bonds approved in May 2007 in September of that year.
Landeros said the district will consider using Build America Bonds when coming to market, if the debt package is approved.
“Our financial adviser outlined all the possible plans of financing to our board, which ultimately will make the decision on how the bonds will be sold,” he said.
Issuers of BABs, which were introduced earlier this year as part of the federal stimulus package, receive a 35% subsidy from the Treasury Department on their interest costs.
Landeros also said the district would consider bond insurance “only if the financial situation of the insurer was strong enough” to help lower the costs of issuance.
South San Antonio ISD carries underlying ratings of A from both Fitch Ratings and Standard & Poor’s, and A3 from Moody’s Investors Service.
Standard & Poor’s analysts said the rating reflects “the strong level of state support for debt service and operations, which offset the district’s relatively low wealth levels, a high general-fund balance that has stabilized after a recent trend of decreasing student enrollment and fund balance drawdowns, and limited future capital needs.”
Texas schools districts issuing bonds now rely upon their underlying ratings to keep costs of borrowing as low as possible because bond insurance is prohibitively expensive and the state’s triple-A enhancement program has been suspended.
The state shelved the Permanent School Fund in March due the declining value of the fund.
Some school officials have said the state has indicated hopes to reopen the bond guarantee program this fall. But it won’t happen until the Internal Revenue Service issues a ruling on a proposal to increase the fund’s capacity to back bonds to five times its market value from the current two and a half times.