DALLAS — Tulsa County Independent School District No. 3 will begin 10 years of scheduled sales with a $19 million general obligation issue set for competitive sale on Feb. 16.
The sale will be the first tranche from a $295 million authorization approved by voters in December 2009. It includes $10 million of bonds for transportation and $285 million for educational facilities and equipment.
The schedule of sales includes $30 million of the GO bonds in 2011, $20.2 million in 2012, $19.5 million in 2013, $22.3 million in 2014, $28 million in 2015, $36.2 million in 2016, $28.7 million in 2017, $28.7 million in 2018, $32 million in 2019, and concluding with a $30.4 million sale in 2020 that would exhaust the 2009 authorization.
The district’s outstanding debt is rated Aa3 by Moody’s Investors Service and AA by Standard & Poor’s. It serves the Tulsa suburb of Broken Arrow and is the sixth-largest district in the state, with an enrollment of more than 16,000 students.
In August 2009, district trustees endorsed a 10-year plan to finance school improvements with proceeds from lease revenue bonds issued by a local trust authority that would be supported by annual tranches of the district’s general obligation bonds.
The issuing authority will use the proceeds of the lease revenue bonds to build new facilities and upgrade existing schools, and lease them to the district. The district will issue general obligation bonds annually for debt service on the lease revenue bonds, and acquire the facilities when the lease revenue bonds mature.
However, Stephen Smith of Stephen L. Smith Corp., the school district’s financial adviser, said proceeds from this first bond issue would not be used for debt service on lease revenue bonds.
“It was prudent to first use all the financial resources available to the district before inaugurating the lease revenue bond program,” Smith said. “It makes sense to use the money for these projects and not increase the borrowing at this point.”
With the sale, the district’s net outstanding debt will total $55.4 million, or almost 8.5% of its net assessed valuation of $652.6 million. The debt limit for school districts in Oklahoma is 10% of assessed valuation.
With the lease revenue program, the district can obtain the funds needed to build school facilities on a long-term basis while complying with the state limit on GO debt.
Smith said he expects the first tranche of the lease revenue debt to be issued later this year.
“When new projects are let out for bids, the district can go to the issuing trust authority to ask it to issue the lease revenue bonds needed for the projects,” Smith said.
The district has met with several trust authorities in the county, he said.
“We’ll probably go with the one from the city [the Broken Arrow Economic Development Authority], but there are four or five that would be appropriate,” Smith said.
The district will use $17 million of the proceeds to begin an effort to remove all portable buildings from existing campuses, and $2 million for new buses.