DALLAS — The Spring Branch Independent School District is coming to market with the first tranche of debt from a $597 million bond package approved in November, the largest-ever passed by voters in the suburban Houston district.

The district plans to offer $194.6 million of limited-tax schoolhouse bonds in the competitive market Monday.

First Southwest Co. is the financial adviser and Vinson & Elkins is bond counsel to the district, which is about 10 miles west of downtown Houston.

Karen Wilson, associate superintendent for finance, said next week’s sale begins the district’s 10-year program to replace 12 aging schools that were built between 1938 and 1967. The district’s enrollment has plateaued at about 32,000. Wilson said officials expect the student population to remain cyclical with the ebbs and flows of the nearly built-out community’s population.

“We certainly felt with interest rates where they are and the significant needs of the district it made sense to get this sale done and start using proceeds as quickly as possible to let contracts and get these schools open in time for the 2009-2010 school year,” she said.

Proceeds will fund replacement of two elementary schools, acquisition of 85 new buses, and upgrades to technology and safety and security across the district.

Wilson said November’s bond package was the first passed in the district since 1999.

“We fixed some variable-rate debt about a year ago through a negotiated sale and that worked very well for the district,” she said. “Our board and administration invite competition ... and if we’re going to do a competitive sale, we felt now is an advantageous time to do that. Hopefully the bond market will cooperate and insure we secure the best rate for our community’s taxpayers.”

“We had an extensive facilities study that was looked at by 60 to 80 people in our community and we have another 60 folks in our bond oversight committee,” Wilson said. “This sale is is really the culmination of two years of planning and hard work.”

Standard & Poor’s assigned a AA underlying rating to the sale, citing the district’s desirable location in the Houston area, experienced financial management team, and strong support for the bond program.

Analysts said the taxable-assessed value of the district increased by 19% the past five years to $14.8 billion for fiscal 2008. Officials have increased the general-fund balance for five consecutive years to $62 million. The district sends a sizable portion of its property taxes back to the state under the so-called Robin Hood school financing system.

Moody’s Investors Service assigned its Aa2 underlying rating on the school system’s “large, mostly residential tax base, moderately elevated but manageable debt position, and well-maintained financial operations.”

The bonds, which are structured as serials reaching final maturity in 2038, also will be backed by Texas’ triple-A rated Permanent School Fund.

The Spring Branch ISD is selling debt ahead of other Houston-area districts that had enormous bond packages approved last fall.

In addition to Spring Branch, voters in and around the nation’s fourth-largest city approved more than $2.6 billion of school bonds in November and another $800 million of debt for Harris County.

The Houston International School District has a $400 million bond sale ready to go, but it awaits a ruling from the state attorney general’s office on the validity of the election due to lawsuits brought against the district.

Standard & Poor’s upgraded the HISD to AA-plus ahead of the sale, citing an expanding economy and strong financial-management practices. It is just the second Texas school district to reach the AA-plus category. There are no triple-A rated districts in the Lone Star state, although most school debt carries the highest rating due to the guilt-edged PSF.

Voters in suburban Cypress-Fairbanks Independent School District authorized $807 million in November for 13 new campuses and land acquisition for 10 more schools among other needs.

Cy-Fair ISD, located northwest of Houston, has yet to issue any of those bonds.

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