Weatherford Democrat

Aledo ExtrA

June 17, 2014

Committee recommends Aledo ISD bond election

$73.9 million figure to be 'scrubbed' as group concludes

WEATHERFORD — By JUDY SHERIDAN

The AISD 2025 Committee Tuesday voted to recommend a $73.9 million bond package to the Aledo School Board with the caveat that administrators scrutinize — and possibly reduce — a $22.8 million estimate included for technology improvements.

Twenty-seven of the 40-member committee — which has been working since early March to chart the district’s path through the next decade — voted on the proposal, with 16 in favor and 11 against.

 At issue was uncertainty about the bond’s final dollar figure, pending a “scrub” of the technology estimate, which Superintendent Derek Citty gauged to be high.

 Citty has said the three issues for a bond election boil down to technology that has “the ability to deliver instruction, communicate through the network and accomplish safety and security goals,” as well as facilities and buses.

Committee member Glenn Breisch, who made the motion for the vote, said he chose the $73.9 million figure because it was the largest given by financial advisor Bill Gumbert, of BOSC, Inc., while staying within the maximum 50-cent state cap on the debt service portion of the district’s tax rate.

In his presentation to the board on the district’s capacity for issuing bonds, Gumbert noted the successful bond election in May of 2008, totaling about $67 million.

 He set the stage for an upcoming bond issue by talking about growth and debt, concluding by saying the need for buildings to accommodate growth would “force Aledo ISD to approach the 50-cent tax rate limit” for debt service.

Using information from Templeton Demographics and the Texas Education Agency, Gumbert pointed out the district’s enrollment has increased 39 percent in the last 10 years — an addition of 1,321 students — and showed projections indicating a 109 percent increase in the next 10 years, with the addition of 5,154 students.  

Citing figures from the Municipal Advisory Council of Texas, Gumbert said the  district’s $143 million in bond principal outstanding — a measure of debt — was the 110th highest statewide, yet still “relatively low” among comparable districts.

State law dictates that school districts issue new bonds only to the degree that the debt service portion of their two-part tax rate will not exceed 50 cents.

Aledo ISD’s current debt service portion is half that, 25.52 cents, while the other part of the tax rate —used to fund school operations — is at the state maximum of $1.17, adding up to a total tax rate of $1.4252 per $100 assessed valuation.

Gumbert’s presentation showed that raising the debt service portion of the tax rate by 13 cents  — to 38.52 cents — was needed to meet current debt service payments, while raising it to the 50-cent limit would allow the district to pay another $2.7 million annually for new bonds. This is estimated to fund the $73.9 million bond value recommended by the committee.

The district has used reserves to cover the 13-cent shortfall for current debt payments for the last two years, rather than raise the tax rate.

Gumbert’s preliminary bond capacity analysis assumed that new bonds would be sold at an interest rate of 5 percent and repaid over 30 years, with a structure that allows the district to pre-pay without penalty.

The biggest factor in determining bond capacity is the value of the district’s tax base, he said, which determines annual revenues.

In 2014-15 the taxable assessed valuation is projected to be  $2.36 billion, he said, up by $81.2 million after two years of decline.

Gumbert estimated an average annual increase in taxable valuations of about 4 percent through 2019-20.

Based on Parker County Appraisal District figures, the average taxable home value in the AISD is $233,222, making the current average annual school tax bill $3,323.

 Passage of the maximum $73.9 million bond issue would increase the annual tax bill by about $571 for the owner of the average value home.

While AISD bond issuance is limited to $73.9 million, voters can approve a higher dollar amount, Gumbert said, authorizing the district to sell more bonds as the tax base grows.

“There is no limit on approval,” he said.

The district’s bond capacity should reach $325 million in the next 10 years, he added.

Gumbert showed a timetable for a Nov. 4 bond election, which would require the school board to call the election on or prior to Aug. 18.

Approval by voters would allow a bond sale in January or February, with proceeds in hand by February or March.

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