The bond is on, now what?
The fate of Stephenville ISD facilities is now in the hands of voters.
With bond interest rates barely rising above a 10-year low and construction costs also favorable, a financial advisor told the Stephenville ISD board of trustees Monday that the current economic climate offers prime conditions for school construction projects.
Meanwhile, less than 24 hours after the board voted to call a Nov. 2 bond election, Superintendent Dr. Darrell Floyd is working to inform voters of the current plans to improve three campuses within the district.
Below are some details both men have shared to help voters decide if they should check "yes" or "no" in the ballot box.
Current economic factors
On Monday, Josh McLaughlin with BOSC, Inc., presented the board with "The Bond Buyer 20-Bond Index," a tax-exempt general bond yield index, which tracked the average interest rates of 20 tax-exempt bonds from 1999-present. According to the index, the highest rates in the last decade were seen late 1999 to early 2000 with an average yield of 6.09 percent. The low hit 10 years later, in late 2009, at 3.94 percent, and McLaughlin said the current interest rate is ringing in at about 4.16 percent.
McLaughlin said an interest rate increase of just .25 percent would add up to increased interest costs of more than $2.5 million when looking at an almost $34 million bond program amortized over 30 years.
In addition, McLaughlin presented a United States Construction Index, which showed construction costs peaked in mid-2008 and have recently declined by 10-20 percent to cost levels experienced in 2008. At the high point, costs were at $143.30, currently costs are at $136.90.
"Historically, construction costs have correlated with the prevailing economic cycle and construction costs are likely to increase once the economy rebounds," McLaughlin said. "But there remains a current opportunity to save significant dollars on authorized school construction projects."
McLaughlin explained the construction index data by telephone Tuesday, saying the information is not actual costs estimates, but explains current trends in the industry.
"The U.S. Construction Index, which is based upon data published by the U.S. Bureau of Labor Statistics, is meant to provide a look at how inputs to construction industries have increased over a period of time," McLaughlin said. "Using January 1, 2004 as a start date for the index, the high point of 143.3 illustrates that the index (as a proxy for construction costs) has increased by 43.3 percent since 2004. It is important to note that this particular index does not provide construction cost data in terms of dollars per square foot. We utilized this index within our presentation solely for the purpose of demonstrating the current trend of construction costs and that construction costs are currently lower than just years ago."
After reviewing other historical factors relevant to the SISD, including a 1997 bond election that received 87 percent voter approval, McLaughlin then answered the biggest question on voters' minds - how will taxpayers within SISD be impacted if the bond proposition receives voter approval in November?
Working under the assumptions that the tax rate increase will be phased in over a three-year period, the bond program is sold utilizing both traditional tax-exempt bonds and Qualified School Construction Bonds (QSCBs) at interest rates of 5.75 and 1 percent, respectively, bonds are amortized over a 30-year period and structured to allow prepayments annually and without penalty, and a 97 percent tax collection rate. McLaughlin said the average homeowner will see an estimated annual increase of $44.76 on the I&S (interest and sinking) rate portion of SISD taxes. He said the average taxable home value rings in at $84,385.
For a $100,000 home, the annual increase would be an estimated $53.04, add up to $105.96 on a $200,000 home and homesteads valued at $300,000 would see an annual hike of about $159 annually for three years. He said the tax increases will be realized by homeowners in 2011-12 through 2013-14.
What is the plan?
Less than 24 hours after the school board unanimously voted in favor of calling the November bond election, Floyd was working to break the plans down into simple terms.
Floyd said if approved, bond proceeds would allow for improvements and renovations to SISD elementary campuses, pre-kindergarten-sixth grade with a total price tag of $33,985,000.
Floyd also said the following will occur: Central Elementary, which was built in 1939, will be abandoned; the older parts of Chamberlin Elementary will be demolished and a new structure will be built between the annex and cafeteria to allow the campus to accommodate pre-kindergarten-first grade students; a new wing and renovations at Gilbert Intermediate will accommodate the district's second-fourth grade students as the campus becomes Gilbert Elmentary; and renovations at Hook Elementary will allow the campus to transition into Hook Intermediate, home to fifth and sixth graders.
"This bond package will fund necessary elementary education facility needs in our school district, including space for growth for the next 20 to 30 years," Floyd said. "It will address approximately 80 percent of the facility issues pointed out in last year’s facility assessment study."
What about other needed improvements?
While the facility assessment showed a number of issues at Stephenville High School that need to be corrected, Floyd explained the district's decision to hold off on the estimated $26 million facelift for the time being.
"The school board realizes that there are also facility needs at the high school that need to be addressed, but ultimately felt that a bond issue put before voters that included high school renovations would be too large at this time," Floyd said, adding that the trustees are committed to addressing those needs in a couple of years. "They also understand that, unless something drastic changes with school finance, a TRE (tax ratification election) election will be necessary sometime in the not too distant future."
When can you voice your opinion?
Voters who live within the Stephenville ISD, and are not currently registered to vote, have until Monday, Oct. 4, to register. Early voting will be held at the Erath County Courthouse and Dublin Courthouse Annex Monday, Oct. 18-Friday, Oct. 29.
On Nov. 2, voters can cast a ballot at any one of 11 polling places - Huckabay School, Lingleville School, Selden Community Center, Bluff Dale Volunteer Fire Department, Morgan Mill Community Center, Erath County Annex in Dublin, Erath County Courthouse, CenturyLink Telephone Office (formerly Embarq), TexasBank, United Cooperative Services Building and Citibank.