McAllen ISD reviews options to lower tax rate while weighing $220M or $290M bond authority

McAllen ISD trustees heard an informational briefing Sept. 10 on two options for the district's 2025-26 tax rate and potential voter-authority for future bonds, officials said. The presentation, delivered by the district's financial advisers from Estrada Hossa, outlined a plan that would lower the district's total tax rate from $0.99 to $0.93 for fiscal 2025-26 while offering either $220 million or $290 million in bond authority to address facilities needs.

Dr. Miguel de Los Santos of Estrada Hossa, introduced by Lorena Garcia, the district's deputy superintendent for business and operations, told trustees that staff and advisers had developed two financing options: one that keeps the I&S (interest and sinking) rate at 13 cents and yields about $220 million in bonding capacity, and a second that phases the I&S rate up to $0.1616 over several years and yields about $290 million. "We've developed 2 options," de Los Santos said, and the board should "mull those 2 options and then decide" at a later date.

The presentation emphasized that either option would produce the same proposed total tax rate of $93.22 per $100 of property value for 2025-26 (commonly reported as $0.93). Bobby Villareal of Estrada Hossa said recent prepayments and defeasances had reduced outstanding debt and created an I&S fund balance the district can use to lower the near-term I&S rate to 13 cents. "So that will extinguish all your debt," Villareal said, describing how prior prepayments and the fund balance affect capacity calculations.

Advisers described how the district would not sell the entire authority at once but would sell in tranches tied to property-value growth and state compression on the M&O (maintenance and operations) side. In the $220 million example, advisers showed two tranches (roughly $100 million in 2026 and $120 million in 2027). In the $290 million example, advisers showed a phased approach that could add a third tranche in 2028 for an additional approximately $70 million. Dr. Angel Marallanes of Estrada Hossa said selling in multiple tranches allows the district to take advantage of value growth and compression to avoid increasing the total tax rate paid by homeowners.

Board members asked procedure and limits. Advisers said the district can include up to six separate bond propositions on the ballot, and that propositions are tied to categories defined by statute; the district must list projects and amounts by proposition and cannot move dollar figures between propositions once adopted. "If it's just school facilities ... there is a requirement to have" statutorily defined ballot language, an adviser said. The board was told the district must finalize any decision a few weeks before Feb. 13, 2026, the last day to call a bond election for May; Lorena Garcia noted, "by February 13, which is the last day to call on a bond for May."

Advisers also noted state-level factors that affect future compression and capacity. They told trustees the projections assume current law on state compression remains in effect and that recent legislative sessions had adjusted compression amounts on a one-time basis. When a board member asked whether a future legislative change could eliminate property taxes, an adviser responded that most discussion focuses on the M&O component and that limits on voter-authorized debt have been discussed but no specific change was presented to the board at the workshop.

Trustees and advisers discussed voter-authority strategy. One adviser recommended asking for $290 million authority, saying leaving $70 million "on the table" would restrict the district's ability to address extensive facilities needs; a trustee said the facilities needs likely exceed $290 million. Advisers added the district could request authority above $290 million and then sell only as much as fits the tax-rate target in future years, or return to voters later for additional authority.

No formal decision was made during the workshop; the item was informational. The board will receive a formal tax-rate proposal later in September, and any bond call or ballot language would require later board action. The meeting adjourned after the presentation.