Tulsa County, Okla., ISD Sets $67 Million for CIP

DALLAS — The Tulsa County, Okla., Independent School District No. 3 will finance the second phase of its capital improvement plan with proceeds from $67.3 million of lease revenue bonds issued by the Tulsa County Industrial Authority.

The bonds are going to market in a negotiated deal next week, with pricing set for June 19.

D.A. Davidson & Co. is the underwriter.

Hilborne & Weidman PC is the bond counsel for the district, which serves the Tulsa suburb of Broken Arrow and a small portion of Wagoner County. Stephen H. McDonald & Associates Inc. is its financial advisor.

The ISD’s $75.7 million of outstanding general obligation debt is rated AA by Standard & Poor’s.

The Industrial Authority’s lease revenue bonds issued for the district are rated AA-minus.

The district intends to make debt service payments on the lease revenue bonds with proceeds from annual issues from $285 million of GOs voters authorized in 2009.

However, the bonds are officially supported by annual lease appropriations by school trustees from district revenues without a direct pledge of the GO bond proceeds.

“The security of these bonds is actually the facilities being financed,” said Ryan McDonald, executive vice president with McDonald & Associates.

Oklahoma law limits school districts’ outstanding GO debt to 10% of net assessed valuation.

Voters can approve bonds totaling above the 10% ceiling, but the bonds cannot be issued until capacity is available.

“Lease revenue bonds are a very popular financing vehicle in Oklahoma,” McDonald said. “It allows districts to complete large projects without going over the 10% cap.”

Under the lease revenue plan, the district leases school sites to the district under a ground-lease agreement. The Industrial Authority in turn subleases the bond-financed facilities to the district every year until the debt is retired.

The ISD will issue the authorized GOs annually when additional capacity becomes available as existing debt rolls off the books and property values increase.

The property tax rate that is dedicated to debt service is expected to remain at 29 mills.

Voters in 2011 reauthorized $73.5 million of the GO bonds to reallocate the proceeds due to changes in several projects. The 2009 bond package won with the support of 70% of those voting, with the reauthorization posting a 78% approval rate.

Ahead of the sale, the district has $222 million of authorized but unissued building facility GO debt from the 2009 authorization, and $6 million of transportation GO bonds.

The district issued $20.5 million of GO bonds in February 2012.

The Industrial Authority issued $71.8 million of lease revenue bonds for the district in 2011.

A tentative schedule calls for annual sales of five-year GO bonds in June through 2022.

Expected sales include GO tranches of $22.2 million in 2015, $28.1 million in 2019, $22 million in 2021 and a $48.9 million issue in 2022.

The district has 17,000 students, with enrollment expected to reach 20,000 by 2022.

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Oklahoma
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