DALLAS — Living on the fringe of Dallas’ booming northern suburbs, 879 voters in the community of Prosper recently said yes to $700 million of bonds, as the region’s explosive growth is expected to overtakes their rural school district in the near future. By a nearly 4-to-1 margin, voters on Nov. 6 handed the Prosper Independent School District a virtual blank check to build schools to serve the population they see speeding their way on the expanding Dallas North Tollway.It was one of the largest school bond issues this year, and certainly one of the largest per capita debt authorizations in Texas history, officials say. In fact, the district, with about 2,800 students currently enrolled, will wait for updated property values to be certified before selling any of the bonds to be certain debt coverage levels are adequate.“This bond package is truly unprecedented for a district of our size,” superintendent Drew Watkins said. “I have to hand it to our parents, as they’re forward-thinking people that expect outstanding facilities for their children and we certainly appreciate that.” North Texas is growing so fast and suburbs are spinning off exurbs so quickly that the $710 million bond package passed in Prosper with barely any dissent, with 80% of the 1,100 voters giving their assent.
Prosper ISD, about 35 miles north of Dallas in Collin County, plans to build four elementary schools, a middle school, and a second high school with proceeds from the new authorization. Officials expect to add 1,000 students each of the next two years with continued growth through 2016. Total enrollment is projected at between 40,000 and 50,000 in about 20 years once the land within the district approaches complete build out. Watkins said the area is still about 70% agricultural. The total population of the district, which includes parts of Frisco and some areas in eastern Denton County, is about 9,500 residents.The rapid influx of new residents has affected the PISD’s underlying credit. Moody’s Investors Service rates the district at Baa1 due to “tremendous growth occurring in the district,” which has led to “elevated debt burdens that are substantially higher than most Texas school districts.” Vice president and senior analyst Dwight Burns said it’s not unusual for a school district to seek approval of larger authorizations “so they don’t have to go back to voters every year.”Neither Standard & Poor’s nor Fitch Ratings rates the district’s underlying credit.PISD exhausted a $135 million bond authorization from 2004 with a $72 million sale in August to begin the first phase of the second high school. Other proceeds from the bond package were used to expand the current high school, upgrade a stadium, and build two elementary schools and the first new middle school in the district in more than 100 years.Watkins said the August debt sale put the district at capacity for bond issuance based on the taxable assessed value of the district. Prosper levies the maximum interest and sinking tax of 50 cents per $100 of assessed valuation. But none of the newly authorized debt will come to market until next August at the earliest, as the current property value of the district doesn’t provide enough to cover the debt service of another bond sale. PISD’s estimated fiscal 2007 appraised value of about $1.32 billion is up 35% from the prior year. Jeff Robert, senior vice president with First Southwest Co., the financial adviser to the district, said it’s prudent to wait until the new certified value of PISD is reported in July before any bonds come to market.“It’s easier to calculate debt service once we have that certified value,” he said.Moody’s analysts Burns said, “for a district to almost have to 'grow into the growth’ before it can issue debt from a new authorization is somewhat unusual.” Still, Robert, who deals exclusively with Texas school districts, admits that the growth that Prosper and other school systems are experiencing is “phenomenal.” “Now that they’ve extended the [Dallas North] Tollway out almost to [State Highway] 380, that area is going to see a lot of commercial development,” Robert said.Recent completion of an extension of the tollway puts the northernmost terminus of that heavily used road about one mile south of Prosper.The $5 billion SH 121 toll road is being constructed 10 miles south of Prosper. The 26-mile stretch will be the largest toll project ever undertaken by the state.Both Watkins and Robert said every indication they’ve seen points to continued rapid growth of residential and commercial development within the school district. And Watkins said more commercial development has taken place recently as opposed to strictly residential. Once the stores and offices are up and running, PISD’s capacity to issue debt will increase, allowing for more debt sales and subsequent construction of new schools.While new-home construction has dropped in much of the country as the subprime mortgage default crisis expands, commercial development continues in much of Texas. Earlier this month, the National Association of Home Builders reported nationwide housing starts rose 3% for October but were down 16% from a year earlier. But the group also said, “North Texas remains a strong nonresidential construction market,” with nearly double the amount of building as last year.Burns, the superintendent, added that just because $710 million has been approved, PISD doesn’t have to issue that much debt. He also agreed that it’s prudent for the district to wait for the next certified values to be reported before bringing another tranche to market.The neighboring Frisco Independent School District had a $798 million bond package approved in 2003, and voters in the Cypress-Fairbanks Independent School District outside San Antonio passed a $807 million package earlier this month. Those are the only two suburban school districts in Texas to have larger bond packages than Prosper. But both have large enrollments that have been experiencing double-digit gains all decade with projections for more over at least the next few years. Frisco ISD serves about 27,500 students, and Cy-Fair has an enrollment of more than 92,000, which is expected to climb to nearly 110,000 by 2010.Aside from the 2004 bond package and the one approved earlier this month, the only other school bond package ever approved by Prosper voters was in 1963. The amount: $320,000.At the 1960 Census, there were 41,247 people living in all of Collin County. Now, the county is one of the fastest-growing areas of the country with a population of nearly 700,000, up more than 42% since the 2000 Census. Of the places where people have been flocking to in Texas over the past decade or so, few have seen growth comparable to the North Dallas suburbs. The estimated 2007 populations of 79,500 for Frisco, which is just south of Prosper, and almost 114,500 for McKinney — about 13 miles to the east — are more than double the 2000 Census figures.Another 25 miles south is Plano, one of the first examples of suburban sprawl north of Dallas. While not expanding as rapidly as its smaller neighbors, Plano continues to grow with a current population of about 270,000, which is up 20% from the start of the decade.Three Collin County-wide bond referendums also passed easily earlier this month. About two-thirds of voters approved $235.6 million for roads, $17 million for parks, and $76.3 million for new adult and juvenile detention facilities.Richard Williamson contributed to this story.