DALLAS - The Cypress-Fairbanks Independent School District in Texas is coming to market next week with the first slice of a bond package approved in November totaling $807 million for 13 new schools, land acquisition for 10 future campuses, 275 new buses, and renovations to existing facilities.
On Wednesday, the rapidly growing suburban Houston district plans to offer about $259 million of unlimited tax schoolhouse and refunding bonds through a negotiated sale led by Merrill Lynch & Co.
About $9 million of the issuance is a refunding that will fix out some adjustable-rate debt. The new-money component of the sale includes $100 million from a 2004 authorization and $150 million from the bond package approved last fall. Following the sale, the district will have about $1.61 billion of debt outstanding and $770 million of authorized but unissued bonds. Officials plan to bring all the authorized debt to market over the next five years.
RBC Capital Markets the district's financial adviser and Vinson & Elkins LLP is bond counsel.
The district also plans to offer about $41 million of tax anticipation notes in a few weeks to augment its fiscal 2009 operating fund.
Ryan O'Hara, vice president with RBC, said the district issues notes sometimes due to timing issues that arise with an imbalance in expenditures against state-appropriation payments and property-tax collections. Officials have said that while the district's costs tend to follow a level pattern throughout the year, receipts follow an uneven pattern.
Fitch Ratings assigned an F1-plus rating to the Tans and a AA-minus underlying rating to the bonds, which will also be backed by the state's triple-A rated Permanent School fund.
Analysts said this is the third time in 13 years that the district has issued tax anticipation notes to cover for cash-flow and the highest short-term rating reflects the district's "adequate coverage by diverse and stable pledged revenue sources."
Standard & Poor's assigned a AA-minus rating to the bonds. Analysts said the rating reflects the district's easy access to the Houston employment base, healthy assessed-value growth, sound financial position and long-range planning. Moody's Investors Service rates the district at Aa3.
Some mitigating credit factors include high overall debt and the significant capital needs to deal with the rapid enrollment gains, according to analysts.
The suburban school district is the third largest in Texas behind Dallas and Houston with a current student population of roughly 96,600 in 47 elementary schools, 15 junior high schools, eight high schools and three alternatives campuses.
A decade ago the district's enrollment was about 55,800 and officials project a total student population of more than 108,000 in 2010. The population within the roughly 186-square-mile district, which includes a small sliver of northwest Houston, is more than 750,000.
O'Hara said the district is roughly 60% built out.
"The land mass for the district is simply huge," he said. "As time goes on, the district is just going to grow and grow and grow."
Fitch said the district's tax base averaged 10% annual growth the past five years, including a $2.8 billion increase this year to $27.9 billion. The district's taxable-assessed value has more than doubled the past 10 years to $27.87 billion for fiscal 2007.