DALLAS — Texas school districts continue to come to market even though the state’s Permanent School Fund that provides triple-A rated guarantees for schools bonds is suspended pending a federal tax ruling on increasing in the program’s capacity. Two districts are issuing bonds this week following upgrades of their underlying credits.
Bastrop Independent School District plans to offer about $38.4 million of school building bonds through a negotiated sale led by First Southwest Co. after receiving an upgrade to A-plus from A by Standard & Poor’s. Proceeds from the bonds will fund continued construction of a high school, a stadium and a performing arts center.
Analysts said the upgrade reflects the “district’s maintenance of a strong financial position.”
“We expect that the district’s sound planning and conservative management will allow it to maintain its sound financial performance and position while meeting projected student enrollment growth and capital needs as its property tax base continues to expand,” Standard & Poor’s credit analyst Daniel Cuddy said.
“We also expect that continued property tax base expansion through current and projected residential and commercial development will help keep debt levels manageable,” he said.
BOSC Inc. is the financial adviser to the central Texas district, which is about 30 miles southeast of downtown Austin. The district currently serves a total enrollment of about 8,500 students. Projections show at least 1,000 new students entering the district by 2013 and another 1,000 coming by 2017.
Bastrop ISD’s fiscal 2008 assessed value of $2.5 billion is up 79% from $1.4 billion six years earlier. And officials managed to end last year with an unreserved general fund balance of $16.6 million, or a very strong 28% of operations, according to Standard & Poor’s.
Moody’s Investors Service assigned its A2 rating to the sale and affirmed the rating on the district’s $147.6 million of parity debt outstanding.
Analysts said the district’s growth peaked in fiscal 2002 and 2003 when values increased by 31% and 29% respectively due to the completion of two power plants that added approximately $220 million to the tax base.
Irving Independent School District is bringing $65 million of school building bonds to market Thursday on the heels of an upgrade to AA-plus from AA by Standard & Poor’s.
The higher rating reflects the district’s “good financial management practices, coupled with a strong financial performance trend, as evidenced by very strong reserves,” according to analysts.
Southwest Securities Inc. is lead underwriter for the negotiated sale. Proceeds will fund renovations to the district’s 38 campuses, technology upgrades and new buses. Irving ISD, which has $510 million of debt outstanding, serves a total enrollment of about 32,000 students.
RBC Capital Markets is the financial adviser to the suburban Dallas district and Vinson & Elkins LLP serves as bond counsel.
Debbie Cabrera, assistant superintendent for business and finance, said officials won’t insure the bonds, in part, because of the upgrade.
The district’s fiscal 2009 taxable-assessed value rose 6.1% from a year earlier to $10.2 billion. Irving ISD reported another surplus for fiscal 2008, resulting in an unreserved general-fund balance of $73.7 million “or a very strong 34.7% of operating expenditures,” according to Standard & Poor’s. And officials project another surplus of $800,000 for this year, analysts said.
Moody’s Investors Service assigned its Aa3 rating to the sale, citing the district’s sizeable tax base, its location in the middle of the Dallas-Fort Worth metroplex, and stable financial operations with an elevated debt profile.
Elsewhere, the city of Mission is offering two tranches of general obligation debt worth $13.3 million this week. The town in South Texas is about five miles from the Mexico border. It plans to issue $7.8 million of refunding bonds and $5.5 million of combination tax and limited pledge revenue certificates of obligation.
Southwest Securities and SAMCO Capital Markets are co-managers for both tranches, each of which is structured as serials maturing in 2010 through 2029.
RBC and First National Bank are co-financial advisers to the city, which carries an underlying rating of A3 from Moody’s. Ramirez & Guerrero LLP is bond counsel.
Back in North Texas, Flower Mound also plans to offer two tranches of GO debt this week worth about $8.3 million. It will issue $4.7 million of refunding bonds and $3.6 million of certificates of obligation in negotiated sales led by Southwest Securities.
First Southwest is the financial adviser to the town, which is about just northwest of Dallas-Fort Worth International Airport.
Flower Mound carries underlying ratings of Aa2 from Moody’s, AA-minus from Fitch Ratings, and AA-plus from Standard & Poor’s.
The town’s current population of nearly 68,000 is 34% higher than the 50,702 at the start of the decade.
