North Lamar ISD beat the odds with the sale of roughly $44 million in bonds Monday with a lower interest rate than expected, resulting in a more than a 10-cent savings to taxpayers on the district’s projected property tax rate.
Bond consultants had projected a 35.6 cent tax increase, which the district shared in information leading up to the $51.55 million bond election voters approved in May to build a new elementary school, make improvements at all campuses, purchase 15 new buses, purchase laptops, iPads and charging carts to allow a 1:1 ratio of student to learning device, improve athletic facilities and build a larger band hall.
As a result of a 2.41% interest rate, the cost to taxpayers will be a 25 cent increase on the tax rate, according to information presented by John Crumrine of JP Morgan in Austin, who sold the bonds earlier in the day. The term is 29.5 years with a 9.5 year call provision, which would allow the district to refinance at that time if desired. Payments will be twice yearly in February and in August. Total cost to the district stands at roughly $74.4 million.
In the absence of district financial advisor Lucas Janoa, of Live Oak Public Finance in Austin, Crumrine shared information about the impact to taxpayers.
“Prior to the bond being called, projections were for a 35.6 cent tax increase but with the 2.41% interest rate the tax increase will be 25 cents,” Crumrine said. “There will be no tax increase on voters 65 years and older who have a homestead exemption.”
Both Crumrine, during the meeting, and Janoa, during a phone interview after the meeting, credited an A+ underlying credit rating for the interest generated by 15 investment firms that bid on the district’s offering. Bonds were marketed with a AAA rating by virtue of the state’s permanent school fund guarantee, which applies to school districts that qualify.
“That’s one of those doctor visits you don’t want to go to,” Crumrine said about the bond rating process. “It’s invasive, they ask a lot of questions and they poke around. You guys represented your district well, so congratulations on the A+; it doesn’t just happen.”
Janoa was equally complimentary of the administration, the board and the district in general.
“Kudos to the administration of the district and to the board,” Janoa said. “The district has good finances and good finances means strong credit and the higher the credit the lower your interest rate.”
Janoa explained that the 36.6-cent projected interest rate came in 2020 when the district first decided to sell bonds. Since then changes came about, which resulted in a lower interest rate than first projected.
“We made some conservative guesses a year in advance, and fortunately there were several positive things that played themselves out, which allowed the district to have a much lower tax rate for the citizens,” Janoa said as he mentioned the superintendent, her administrative staff and a board that “is committed to transparency.”
“They did all the right things,” Janoa concluded.