DALLAS - One of the fastest-growing school systems in Texas is in the market today with a $277 million offering that will fund another wave of new construction to house an enrollment that is projected to add 32,000 students in the next decade.
The Leander Independent School District plans to issue $277.1 million of unlimited-tax school building and refunding bonds today through a negotiated deal. About $7.8 million of the issue will be refunding bonds.
Today's sale is the first and largest installment from the $559 million referendum passed in November. The district had been using a three-year bond election cycle with voters heading to the polls each May. But officials moved the most recent election up to this past November, in part because the citizenry asked for it.
"It's so delightful to have such fabulous patrons," said Ellen Skoviera, assistant superintendent for business and operations. "Working with the patrons of our district is simply a joy. The community came to the board and requested we move up the election to get started on the construction needs. It's just a huge blessing to have such an engaged community."
Holding the election earlier than usual may also result in savings of $40 million in construction costs, according to officials.
The underwriting syndicate for today's sale includes RBC Capital Markets, Citi, Coastal Securities Inc., Goldman, Sachs & Co., M.R. Beal & Co., and SAMCO Capital Markets Inc.
Southwest Securities Inc. is financial adviser to the district and McCall, Parkhurst & Horton LLP is bond counsel.
Fitch Ratings assigned an A-plus underlying rating to the sale, while Standard & Poor's upgraded its rating on the school district two notches to AA-minus from A due to "strong income levels."
Standard & Poor's analysts said the upgrade also reflects the district's "ongoing growth, leading to diversity, triggered by improved access to the greater Austin area, and consistently strong financial performance, supported by strong financial management practices."
The suburbs north of Austin have been expanding for years as Travis County, Williamson County, the Central Texas Regional Mobility Authority, and the state have worked hard to improve roads in the area. State Highway 183A was widened and transformed into a toll road a few years ago, easing congestion and allowing for greater access to Austin from the north. Leander is roughly 25 miles north of downtown Austin.
The taxable-assessed value of the Leander school district has nearly doubled during the past five years to $11.05 billion for fiscal 2007 from $5.98 billion in 2002.
Skoviera said officials "were jumping up and down and euphoric" when they heard of the upgrade from Standard & Poor's. She also said the higher rating should translate into interest rate savings for the district.
Moody's Investors Serviceupgraded its rating on Leander ISD to A3 from Baa1 in January 2001, but hasn't assigned an unenhanced rating on the credit since then.
Today's sale also comes to market with the triple-A wrap provided by the state's Permanent School Fund. The bonds are structured as serials maturing from 2009 through 2041. The current-interest bonds maturing in 2023 or later and the capital-appreciation bonds maturing in 2018 or later are callable in 2017.
Fitch analysts said the district's financial "success has been the product of sound management and planning practices and a conservative budgeting philosophy." Despite the pressures associated with rapid-enrollment growth, management has been able to add to its "healthy reserves levels," according to analysts.
Skoviera said the school board is cognizant of the need to maintain a strong fund balance.
"We have a board that has had a plan for some time and works hard to implement that plan," she said. "And regardless of turnover in the board, our trustees adhere to that plan, which includes keeping the fund balance high."
She said Leander levies a three-cent maintenance tax that "works magnificently for big-ticket repairs and enables [the district] to stay out of the bond market to a certain extent."
Voters have approved five bond packages since 1994, and the system has built 13 elementary schools, five middle schools, and two high schools with proceeds from those authorizations.
Following today's issue, which also includes nearly $38 million of bonds from a 2006 authorization, the district will have about $1.15 billion of debt outstanding and nearly $320 million of authorized but unissued bonds.
Officials want to build one middle school, two new high schools, and five elementary schools, and acquire land for a seventh high school campus, as well as provide renovations to existing facilities with proceeds from the November authorization.
Ten years ago, the student population of Leander ISD was about 10,600. The enrollment for the current school year is about 26,500 in 15 elementary schools, five middle schools, four high schools, and two alternative campuses. The school district encompasses the cities of Cedar Park, Jonestown,and Leander, as well as parts of northwest Austin.
A study commissioned by the district last year showed more than 14,000 new students flooding the system over the next four years with up to another 18,000 coming by 2016, pushing enrollment to nearly 60,000 for the 2017 school year.
The study, by Texas demographics firm Population and Survey Analysts, recommended the Leander school system build 22 new campuses to match expected growth over the next decade.