DALLAS — Port Arthur Independent School District on the so-called "Chemical Coast" of Southeast Texas plans to issue $100 million of bonds, including $80 million backed by the triple-A-rated Texas Permanent School Fund.
The bonds, expected to price Feb. 23, carry underlying ratings of Aa3 from Moody's Investors Service with a stable outlook.
"The Aa3 rating reflects the district's sizeable tax base with a substantial taxpayer concentration and below average socioeconomic indicators," according to Moody's analyst Karolina Norris. "The rating further considers large financial reserves the district maintains despite tax assessment appeals that have resulted in lower taxable values. The rating is also indicative of the elevated debt burden and slow amortization."
Proceeds from the sale of Series 2015A will be used to construct new school facilities. Proceeds from Series 2015B will refund a portion of the district's outstanding bonds for an estimated net present value savings of 13%.
The $20 million of refunding bonds on the calendar are not backed by the PSF.
With $247.54 million of outstanding debt, the district's tax base grew nearly 27% in fiscal year 2013 and 16.4% to $9.1 billion in fiscal year 2014. However, fiscal year 2015 assessed values fell 10% to $8.2 billion after Valero Energy Corp. won a property tax appeal.
On average, assessed values grew 9.1% annually over the last five years, according to Moody's.
"Officials expect continued growth to continue at a moderate pace going forward and report that pending additions to the tax roll include two new refineries and an apartment complex," Norris said.
In May 2011, Valero's property tax appeal reduced the oil company's liability by $18.5 million over four years. The district agreed to repay the funds over six years, from fiscal 2012 to fiscal 2017. The Texas Education Agency adjusted funding allotment, and reimbursed the district $7.5 million for its tax settlement.
In February 2014, Valero again challenged property assessments and was awarded a $13.5 million settlement. The outstanding $5.9 million of that settlement is due in May. The TEA reimbursed the district $5.6 million for the most recent settlement.
"We will continue to monitor future appeals and their impact to the financial operations of the district," Norris said.
