Latexo ISD Hears Info On Current, Future Bond Issues

LATEXO - Latexo Independent School District trustees received information on bonds during the regular school board meeting in December.

Marcus Dietz, a bond counselor with Fulbright and Jaworski LLP, and Allen Westerman, a financial advisor with SAMCO Capital Markets, presented the board with information on the district’s current bonds and the impact of possible future bonds. According to Westerman, Latexo’s last refund, for its current bonds, was in 2004; and a call date of Feb. 15, 2013 was set on them.

“That would mean, anywhere I think it’s 90 days ahead of the call date, we can begin a process to refund these bonds a second time as a current refunding,” he said.

Westerman explained if the district decides the go ahead with additional projects, and a bond financed at $1.5 million is needed, it could increase the tax rate because the new bonds added with refunded current bonds of $1.8 million would be about $3.2 million.

Another option is to keep the tax rate the same, increase the district’s interest and sinking (I&S) fund and elect to refund the bonds with the intention of trying to retire them. With the new refunding, the district could save between $8,000 and $12,000 a year and would have a smaller debt service.

“It’s very much like refinancing your house,” Westerman said to explain the refunding process. “You’re going to get some money that allows you to pay off those bonds.”

Westerman would assist with identifying a debt service schedule to meet I&S tax rates, and advise how the bonds were to be sold. Additionally if the district decides it wants a new bond, Dietz said the district could apply for qualified zone academy bonds (QZAB), which is a federal program. If the government approves the district for a QZAB, the interest on them would be subsidized.

“You would still be paying interest on your bonds, but the subsidy often times leads to zero percent debt when you take in the subsidy you’re paying and the amount of interest you’re paying out,” Dietz said. “And so it’s usually low or no interest bonds.”

However in order to qualify for the bond, the district would need to send an application to the Texas Education Agency. If the application’s accepted, the TEA would determine how much money it would get through the QZAB. The other rules for the QZAB are the district has to use 100 percent of proceeds have to be used for a specific project on an existing building, the project would have to be located in the district, a business or businesses would have to contribute 10 percent of the total principal amount of the bond in either monetary or in-kind work and 35 percent of the students in the district would need to be eligible for free or reduced cost lunches, Dietz said.

Whether the district decides it wants a tax-exempt bond or a taxable QZAB bond, Dietz explained there are important dates for having a bond election in May of 2012. The district would need to announce if it is calling for a bond election Monday, March 5. The election date would be Saturday, May 12, and the last date someone could contest the election is Friday, June 22.

In other business:

• the board approved Legal Update 91, and Local Update 91 included a policy regulating change orders on building projects. If the bond issue is more than $1 million, the changes can’t amount to more than 25 percent to increase the cost. Other policies pertained to evaluations of non-renewing term contracts and going through a reduction in force, appointing a textbook committee, dating violence policies and a policy requiring the district to notify parents if their child is in after school detention so they can arrange for transportation;

• the board approved allowing Latexo Youth Basketball to use LISD facilities for 2011-2012; and

• LISD Superintendent Don Elsom reported the district has 501 total students and a 96.78 percent attendance rate. He said the lunchroom has also received positive feedback after bringing in a new food services chef to train employees to provide more options.

Latexo’s school board meets at 6:30 p.m. the second Monday of the month in the high school library. The public is welcome to attend.