VISD Bond Sale to Save Millions in Interest

By Rebecca Holm, Victoria Advocate, Texas

Jun. 28–Lower interest rates have made it possible for the Victoria school district to sell more bonds while keeping taxes low. On Monday, the school board priced $100 million in bonds, receiving very favorable market conditions. In a news release issued by the school district, financial advisor Ann Burger-Entreken with First Southwest Company of San Antonio reported that, due to more orders for bonds than bonds available, the school district was able to get a lower interest rate of more than 4.8 percent.

“It will save us millions of dollars in terms of interest that we would have had to have paid,” said Bob Moore, school district superintendent.

In May, voters approved a $150 million bond package that would finance the construction of two new high schools, an intermediate school and two elementary schools, as well as making renovations and repairs to existing schools.

Funds from the bond sales will be available to the district by Aug. 1.

“In order to not have a huge amount of debt all at once and to keep taxes low, the school board decided to sell the bonds over a three-year period,” said Diane Boyett, school district communications specialist. “The plan was to sell $75 million in 2007, $49 million in 2008 and $35 million in 2009, phasing in the tax increase.”

In the news release, Burger-Entreken said that the original projected interest rate would be around 5.5 percent.

“When we started looking at it back in January, the rates were at a historical low for the past 40 or 50 years,” Moore said. However, interest rates remained low over the past few months and the school was able to lock in a rate just under 5 percent, he said.

“During the information campaign that we had, we told the voters that the first year tax impact would be less than 11 cents, so we were committed that we were going to follow that,” Boyett said. “But Ann Entreken said we may be able to go a little bit more than the $75 million and still stay within that 11-cent tax rate.”

She explained that by selling more bonds upfront, the school board would receive more money upfront. The board could move ahead on construction projects and not have to wait until the next year to receive funds.

“It’s going to save the tax payers over a $100,000 a year in the average annual debt service, because of just that little bit difference,” Boyett said. “The taxpayers will be saving money, we’ll have more money up front to be able to move quickly on these projects and then next year, instead of selling $49 million … you sell the rest of the bonds and you don’t even have to fool with in 2009 selling the rest of them.”

The school board has identified several projects it hopes to finish over the summer including renovations and repairs to several schools.

As for the major construction projects, Moore said that the school board has named three architects. SHW Group LLP of Houston will design the two high schools, a middle school and a special events center that will include an indoor swimming pool and auditorium; RWS and Associates of Houston will design the two elementary schools; and Victoria architect Rawley McCoy and Associates will design the new addition to Crain Middle School.

The firms, chosen from 24 applicants, are highly qualified, said Moore, noting that McCoy, who has worked on past VISD construction projects, is the coordinating architect.

“He’ll coordinate with the other two architect firms and be involved on a day to day basis,” he said.

On a side note, Moore said that the budget for the two high schools and the elementary schools will be the same. One of the components when planning for the new schools is that they should be “mirror images of each other; they would be constructed at the same time and opened the same day … a lot of the districts that have had a lot of recent bond elections and a lot of construction, they use footprint blue prints. In other words, they’ve got one school and they repeat that school… it’ll save a lot of money to do it that way.” Rebecca Holm is a reporter for the Advocate. Contact her at 361-580-6516 or rholm@vicad.com, or comment on this story here.

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