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Humble ISD School Board completes bond transactions to reduce district debt by $136 million and save taxpayer dollars
The Humble ISD School Board completed bond transactions in August to reduce the district’s debt and save taxpayer dollars. These actions, which involved refinancing and selling bonds at lowered interest rates, will save Humble ISD taxpayers a total of $136 million over the life of the bonds without extending the district’s debt.
Humble ISD operates a balanced budget. Bonds in Texas are used to finance the construction and renovation of school facilities and infrastructure needed to support schools. Voters in 2008 authorized Humble ISD to sell $245 million in bonds to address the district’s growing student enrollment.
On August 2, Humble ISD took advantage of historically-low interest rates by refinancing $253 million of outstanding district bonds. Those outstanding bonds were originally authorized by bond referendums held in 2002, 2005, and 2008. The refinancing lowered the interest rate on those outstanding bonds from the average original issue rate of 4.91 percent to 2.27 percent without extending the maturity date for that debt. The result of that refinancing transaction will save district taxpayers approximately $56 million dollars in interest payments over the remaining life of the bonds.
This is the second time in two years that the district has refinanced district debt. In 2015, the district refinanced other outstanding debt, generating over $37.8 million in interest savings. In total, those two transactions have reduced the district’s total debt burden by almost $94 million.
Also on August 2, Humble ISD sold $49.9 million in new bonds -- the remainder of the 2008 bond referendum authorization. Those bonds were sold at an interest cost of 2.88 percent. In 2008, when Humble ISD voters authorized issuance of these bonds, interest rates were projected to be 4.75 percent.
With the refundings and the better than anticipated rates, Humble ISD taxpayers have saved a total of $136 million over the life of the bonds that were authorized by voters in the 2008 bond referendum.
The savings generated through the refinancing transactions combined with the low interest rates secured on the new bond sale will allow Humble ISD to maintain its current property tax rate. This will be the eighth consecutive year that the district has foregone a tax rate increase.
“It was a significant day for the district, and the taxpayers of this district, as we were able to lock in this low rate,” Terrell Palmer, Managing Director of the financial company First Southwest said. “Humble ISD made that happen by being a destination district, a pinnacle district in the state.”
One of the reasons for the district’s ability to sell bond at these low interest rates is the respect that the bond rating agencies have for Humble ISD. Moody’s gave the bonds an Aa1 rating, a distinction that is earned by only 3 percent of all Texas school districts. Standard and Poor’s gave the bonds an AA- rating, a distinction that is earned by just 12 percent of Texas school districts.
Consistent enrollment growth is an important consideration for the rating agencies. Humble ISD is one of the 10 fastest growing districts in the state. The district served 33,000 students in 2008, when voters authorized the sale of bonds to build new schools, maintain and renovate facilities, purchase land, buses and technology. Humble ISD’s projected enrollment for 2016-2017 is 41,500. By 2025, Humble ISD is projected to serve 52,000 students.