Suit puts hold on $1.1 billion Dallas community college bond measure

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Dallas County Community College District must wait until next year to launch a record $1.1 billion bond program after a lawsuit challenged the legality of the election that authorized the debt.

“As long as the election contest suit is pending or until a final, non-appealable judicial order that does not overturn the election has been obtained, the district is unable to issue bonds or finance a public project with same,” said district spokesman Alex Lyda.

Although more than 71% of Dallas County voters approved the bond proposal in May, an unsuccessful Republican candidate for county sheriff, Kirk Launius, filed a lengthy suit challenging the county’s electoral system. The first court hearing is scheduled for February, Lyda said.

“The district will be able to issue bonds after the bond-related litigation is favorably concluded,” Lyda said. “It is never possible to predict exactly how long any litigation will take, but we are pushing for an early trial in these matters and are reasonably confident that the litigation will be resolved early next year.”

Because of the pending litigation, the district is unable to proceed with the first tranche of bond projects which total $200 million-$300 million and include a new downtown higher education and innovation project. Other campus-specific projects that have been identified as necessary cannot proceed at this time.

The lawsuit came before the district had begun the process of seeking financial advisors, underwriters or bond counsel for a possible sale.

“To be clear, we are not in the process of selling or pricing bonds but the lawsuit stopped the district from acquiring interim financing for the projects,” Lyda said. “Interim financing would be used to build the facilities and then sell bonds to pay down the interim financing at some future date.”

In Texas, lawsuits have occasionally delayed projects, but none in recent history has resulted in a reversal of a popular vote. Such lawsuits have proven more successful in neighboring Oklahoma. Before a bond issuer can issue a preliminary official statement, the Texas Attorney General’s Office must certify that there is no pending litigation that would affect the bonds.

DCCCD keeps residents posted about its bond plans on its website. The county it serves has more than 2.6 million residents.

Moody's Investors Service last rated the district Aaa with a stable outlook in May 2017 in advance of a $62.3 million issue of in general obligation refunding bonds. At the time, the district had $294.1 million in outstanding parity debt.

S&P Global Ratings affirmed its triple-A rating and stable outlook a day later.

Over five years ending in fall 2018, the district’s enrollment grew by 13%, from 73,206 students to 82,800. The district projects 92,000 students by 2030.

The growth, district officials say, comes in large part from increased partnerships with area high schools, many of which now allow students to earn DCCCD credit while still in high school. The district also works with local employers to specifically target programs to the area’s needs. That’s led them to expand in healthcare, IT, advanced manufacturing, hospitality, and finance. But those shift quickly, and the new campus will need to be adaptable.

The May bond election was DCCCD’s first since 2004.

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Bond elections Higher education bonds Law and regulation Texas