By J. NOEL ESPINOZA
Special to the NEWS
Early last year, after selling more than three-quarters of the $40 million bond approved by voters in 2018, the San Benito Consolidated Independent School District had a presentation on Tuesday to review the trading of the remaining $9.25 million.
According to SBCISD, the bonds allow the school district to build a state-of-the-art performing arts center, a natatorium, and an indoor multi-purpose athletic facility. At the same meeting on Tuesday, the school board approved the indoor multi-use facility at a cost of $5,168,080.
R. Dustin Traylor, managing director of RBC Capital Markets of San Antonio who delivered the presentation, said the school district sold $30,750,000 of the bonds, which is the first installment of the $40 million bond on February 25, 2019.
“This provided $30,750,000 of proceeds for project construction,” he said.
Traylor said he expects to sell the remaining $9,250,000 on Feb. 18, 2020.
Although the interest rate on the first installment was $3.829, Traylor anticipates the remaining bonds to capture a lower interest rate depending on the market.
“The interest rate will be commensurable where the bond market is now,” he said. “The interest rate was locked in for the $30 million.”
Traylor and school district officials emphasized also that the debt service on this bond program is shared by the Texas Education Agency (TEA) through an Existing Debt Allotment (EDA) program.
A day after the meeting, SBCISD released a press release that elaborated on the subsidies provided by the state.
“The interest and sinking (I&S) tax rate provides funds for payments on the debt that finances a district’s facilities,” reads the press release. “Based on SBCISD’s low I&S tax rate last year, calculations indicate that the EDA Program should pay an estimated 31 percent of the new bond payment, essentially 31 percent of $529,291 which approximately $164,080.”
In addition, based on this year’s I&S tax rate, school officials expect the district to be eligible for 69 percent of the $1,607,350 payment next year which is approximately $1,109,071. They add that the $131,299 payment from the next sale of $9.25 million will also qualify for EDA funding.
“The approximate state aid portion is 69 percent and the local portion is 31 percent of the annual payment,” states the press release.
If the bonds were to be sold right now, Traylor said the interest rate right now is between three percent and three-and-a-half percent.
“The interest rate is going down in the general market place,” he said. “The feds (a couple of times intervened) have impacted the market.”