DALLAS — The Odessa Junior College District will exhaust the debt capacity approved by voters in November 2010 with Wednesday’s negotiated sale of $68.5 million of limited-tax bonds.
Proceeds from the bonds will finance several new buildings as well as renovations and additions to existing facilities on the campus in Odessa, located in west Texas roughly halfway between Dallas and El Paso. The district’s boundaries are coterminous with Ector County.
Matt Boles, managing director at RBC Capital LLC’s Dallas office, said the district elected to issue the entire capacity in a single tranche rather than several sales over a period of years. RBC is the district’s financial adviser.
“The district has capital improvement projects planned over the next three years that they need to get signed, under contract, and under way,” Boles said. “They like where the market is right now.”
There will be a combined retail-institutional pricing period, Boles said, with a priority given to local retail offers.
The bonds are rated AA-minus by Fitch and Standard & Poor’s.
The college district has $21 million of outstanding revenue bonds but no outstanding tax-supported debt. The last bond election was in 1975 for $7 million of revenue debt.
Morgan Keegan & Co. is lead underwriter on the Odessa College sale. Co-seniors include Edward Jones, Raymond James & Associates Inc., and Wells Fargo Securities. McCall, Parkhurst & Horton LLP is bond counsel.
Voters approved the bonds last year, with 10,945 in favor and 6,324 opposed.
The district expects to break ground soon on a $14 million student center. Other projects in the first year of the three-year program include a $16 million math and science center and a $5 million lifelong learning center. New projects in the second year include an $8 million vehicle technology center and four new tennis courts.
The capital program will culminate in the third year with construction of a $3 million firefighting technology and training center on land currently occupied by softball fields. The district has also allocated $22.5 million to building renovations and upgrades to campus infrastructure.
The bonds will be backed by property tax revenue. The current rate of 16 cents per $100 assessed value will increase to 20 cents. Assessed valuation in the district, which is located in the center of the prolific oil and gas fields of the Permian Basin, rose 7% in fiscal 2010 to $10 billion.
Property tax collections accounted for 35% of the district’s operating budget in fiscal 2010, with tuition providing 20% and state aid another 25%. A preliminary version of the fiscal 2012-13 Texas budget cut off all state funding for the district, but the budget bill adopted by the House restored the aid. The district said the bond-financed projects should meet its capital needs over the next 15 years.
Enrollment at Odessa topped 7,000 in fall 2010 but is expected to be more than 9,000 within the next 10 years.