Following voters’ passage of a $335 million bond in May, McAllen ISD is moving forward with next steps: this includes the selling of bonds to generate funding for multiple projects which include modernizing schools, expanding programs and improving safety measures.
Investors priced the bonds on Tuesday, August 11. The district will receive the funds at closing on Tuesday, September 8.
“We are excited because, once these funds are in place, we will move closer to making these vast improvements in our district a reality,” McAllen ISD Superintendent Dr. René Gutiérrez said. “We are preparing to realize a vision that will benefit future generations of children.”
This summer, the school district hired underwriters to structure and market the municipal bonds to potential investors. The sale is expected to raise up to $100 million for capital school construction projects.
The district will issue its remaining $235 million of authorization over the next three to four years. Through a strategic approach, the sale of bonds will be carried out in four phases. In that way, the district will borrow only what it can spend so as not to pay interest on idle funds.
McAllen ISD planned this bond program assuming a 5.05 percent interest rate. However, on Tuesday, the district borrowed at 4.587 percent.
“By coming in below the estimate, it lowers the long-term cost of the program for our taxpayers,” Dr. Gutiérrez said.
The district will repay the bonds from the Interest and Sinking portion of its property tax rate, with a final maturity in 2056 (30 years).
The bond program is organized into five investment areas:
· Modernizations & Alignment ($117.69 million): CTE (Career and Technical Education) expansions, cafeteria updates, and campus refresh projects at the district’s comprehensive high schools and selected elementary and middle schools.
· Wellness, Safety & Security ($40.39 million): Secure front entries, districtwide cameras and access control and elementary gym facilities.
· Fine Arts Multi-Purpose Buildings ($35 million): Fine arts improvements and dedicated mariachi program spaces at all three comprehensive high schools.
· District Equity & Growth ($38.73 million): Classroom additions at Gonzalez Elementary, Milam Elementary and Morris Middle School to address enrollment and reduce portable classrooms.
· Capital Improvements ($103.19 million): HVAC (Heating, Ventilation, Air Conditioning) and roof repairs, site paving and drainage improvements, HVAC control upgrades and districtwide LED (Light-Emitting Diode) lighting.
These projects span elementary, middle and high school campuses. The bond projects are expected to be complete in five years.
The bond program does not increase the district’s overall tax rate. McAllen ISD is holding the total rate at $0.9322, the same rate as last year. In May, the district paid off all its outstanding voter-approved debt, placing the district in position to borrow money without raising the tax rate.
Individual tax bills still depend on appraised property values, which the district does not control.
In July, Moody’s Ratings, based in New York City, affirmed McAllen ISD’s Aa2 underlying credit rating. The bonds also qualify for the Texas Permanent School Fund Bond Guarantee Program, which gives the district an AAA rating and helps it secure lower interest rates.