Derek Honea of RBC Capital Markets gave a presentation to the school board on Monday night and indicated that the entered the bond market on Monday morning and had a great result due to the great economic market.
“I got all of the bonds sold and all the interest rates locked in,” Honea told the board. “We scheduled the delivery date, closing date as July 24.”
The district went to the Howe voters stating the projected tax rate for the bond would be $0.454 but the rate was held at $0.379 for the first ten years and then lowering to $0.3337 and $0.338 beyond.
“We’ve handicapped your appraisal value at 96 percent so we think it could be even better than this,” said Honea to the board. “We came in seven pennies better than what we went out to voters so that’s always our goal.”
The final 2018 debt service was $1,508,345 lower than what was presented to the board in May of 2018 and $2,540,093 lower than what was presented to voters prior to the 2017 bond election.
“We always try to come under budget and we were happy to be able to do that for you,” said Honea.
The All-In True Interest Cost is 3.71 percent and the principal amount of the bonds is $16,495,000 with an Original Issue Premium of $733,628.70 for a Total Sources amount of $17,228,628.70. The maturity date is scheduled for 2045 which is a 25-year bond which is what was given to voters. The optional call date of seven years allows the district to refinance or redeem the bonds for cash.
Bonds are typically purchased by hedge funds and insurance companies.
On May 31, the district met with S&P Global Ratings by teleconference. That discussion upgraded the district’s credit rating from an A+ to an A–. S&P’s rating reflects stable operations and a maintenance of very strong reserves. The only negative feedback was moderate to moderately high overall net debt burden which is a result of carrying bonds. The district was also afforded the use of the Permanent School Fund Guarantee and its AAA credit rating.
Superintendent Kevin Wilson says that the opening of the school is still scheduled to be opened in August of 2019. The architects’ drawings are 75 percent complete and the district will begin soliciting bids in July and August for construction. The first sign of dirt being moved should happen in late August.
Howe ISD is working on easement acquisition for water and sewer. The district and the City of Howe are compiling a study for fire suppression standards and the size of the water line needed. The district hired a fire engineer that can do a study and determine the actual needs and investigate the possibility of having their own on-site tank and pump.
“The architect is breaking up the building to put different firewalls and create different sections which will lower the amount of water to do that,” said Wilson. “If the storage tank is a half a million dollars, it may not make sense. But if it’s $250,000 it may.”
Wilson said the worst case scenario would have the district spending $800,000 on a water line.
