Texas issuers ready plans to tap bond authorization

Texas municipal bond issuers are making plans to sell debt approved by voters in last week’s bond elections, with Dallas poised to begin tapping its $1.25 billion of authorization in fiscal 2025.

The city’s 10-part general obligation bond package, the largest in the May 4 state-wide election, won in lopsided votes. It included $521.2 million of bonds for streets and transportation and $345.27 million for parks and recreation with other areas like flood protection, libraries, housing, and public safety receiving smaller amounts.

“The people of Dallas have spoken, and they have said yes to investing into what I call the three Ps: public safety, parks, and filling potholes,” Mayor Eric Johnson said in a statement. “These investments are critical for Dallas to continue its positive momentum as a world-class city and a premier destination for families, businesses, and visitors.”  

Issuance plans forecast the sale of $250 million of bonds annually over five years starting in fiscal 2025, which begins Oct. 1, according to a city spokeswoman.

In January, the city council approved a pool of 36 underwriters for bond issues over a three-year period. The list includes Barclays, which was subsequently banned from underwriting state and local government debt by Texas Attorney General Ken Paxton.

He launched a crackdown last fall on banks’ compliance with 2021 state laws prohibiting state and local government contracts valued at $100,000 or more with companies that “boycott” or “discriminate” against the oil, natural gas, or firearm industries. Five other underwriters on Dallas’ list — Bank of America, JP Morgan Chase, Morgan Stanley, RBC Capital Markets, and Wells Fargo — are under review by Paxton’s office.

There were 272 bond propositions totaling $17.46 billion on ballots, with public school districts accounting for 58% of the debt requests, according to data from the Texas Bond Review Board, which has not yet posted full election results.

The biggest school package — $777 million of bonds in five propositions — came from Mansfield Independent School District in the Dallas-Fort Worth area, where voters approved two of the propositions totaling $588.5 million.

The district expects to issue the debt over two to four years, pending construction cash flows, with an initial issuance this summer in a likely negotiated deal, according to its communications department.

Georgetown ISD, north of Austin, which serves more than 13,200 students, was more successful, with voters approving its entire $649.5 million, four-part bond proposal.

The district expects to tap the new bonding authority over the next three to four years, starting with an approximately $300 million negotiated issue in July or early August, according to its communications office.

“With this crucial funding, we are well-positioned to accommodate the growth of our district and provide our students with resources to support their growth and achievement,” School Superintendent Devin Padavil said in a statement.

Grayson County Junior College District won approval for $456.5 million of bonds to fund projects to accommodate existing and new programs, expand and update residence halls, as well as for campus infrastructure improvements. Issuance plans were not immediately available.

Fort Worth voters approved a 2-percentage-point increase in the hotel occupancy tax rate to help fund projects at the city’s convention center. The increase is projected to generate $10 million annually, which would be used to back revenue bonds.