Trustees for the Tuloso-Midway Independent School District approved a plan of financing Monday to issue a series of the district's bonds approved by voters more than a year ago.
Charles J. Hall, vice president of First Southwest Co., presented school board members with two options for issuing about $17.5 million of the $27.4 million bond package passed in 2006. The first $10 million was issued last year at an interest rate of 4.25 percent.
The money will be used for district-wide improvements, including technology infrastructure upgrades, renovations to tennis courts at the middle and high schools, and the addition of a science complex at the high school.
Hall said he was pleasantly surprised to look at the numbers from last year's bond issuance and see that the school district's debt service tax rate remained unchanged at 24 cents. This was because the tax base for the school district had increased by about $15 million, Hall said, adding that he initially thought the tax rate would increase to 28 cents.
"From a tax standpoint, you got the first $10 million free," he said.
Overall, lower interest rates and an increase in the tax base lowered estimations that the school district's debt service tax rate would go up by nearly 11 cents. The two options presented to the school board each had potential debt service tax rates at least four cents lower than Hall's initial estimate, according to a report issued to the school district by First Southwest.
One option would have allowed the district to issue the remaining $17.5 million this year all at once. However, the school district's debt service tax rate was estimated go up by nearly eight cents for the 2008-09 fiscal year before decreasing slightly every year after.
The second option would split up the remaining $17.5 million into two issuances, one for this year and the other for 2009. This would allow for $13.9 million to be issued this year at an interest rate of 4.55 percent, with the other $3.6 million to be issued in 2009 at 4.93 percent.
According to the report, the debt service tax rate may only increase by about six cents for the 2008-09 fiscal year. It would decrease slightly every year afterward.
After hearing Hall's findings and recommendation, the school board unanimously approved dividing the remaining $17.5 million into two issuances. The next step will be to sell the bonds March 13, a date also approved at Monday's school board meeting.