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Board authorizes bond sale parameters to capture SB4 hold‑harmless funds; staff to aim for pre‑Sept. closing
Summary
Trustees authorized the district to issue up to $275 million in unlimited tax school building bonds under parameters designed to qualify for Senate Bill 4 hold‑harmless funding, with staff and advisors recommending closing bond sale as soon as practicable to capture roughly $26.2 million in state hold‑harmless funds over the life of the bonds.
The Eagle Mountain Saginaw ISD Board of Trustees on July 28 authorized an order to issue school-building bonds under parameters designed to maximize state hold‑harmless funding created by Senate Bill 4.
What the board authorized: The order authorized the issuance and sale of unlimited-tax school building bonds with a maximum principal amount of $275,000,000, a maximum interest rate cap of 5.5%, and a final maturity not later than Aug. 15, 2055. The board delegated authority to district officials to complete a sale within the parameters and directed staff to seek to close the transaction in time to meet hold‑harmless deadlines described by the Texas Education Agency guidance.
Why the sale was scheduled now: Presenters told trustees Senate Bill 4 created a limited window to close bond issues in order to qualify for extra state funding tied to recent increases in residential homestead exemptions. Presenters recommended selling bonds and closing before the critical deadline to secure the “hold‑harmless” funding; the district’s advisors estimated that, under the plan and modeled assumptions, capturing the hold‑harmless for the proposed issuance would generate about $26.2 million in state funding over the life of the bonds.
Financial context and parameters: BOK Finance estimated a market path in which the district could issue approximately $267 million at a modeled average interest rate of about 5.02% under recent market conditions. To preserve flexibility, staff recommended setting a higher parameter cap (up to $275 million) and an interest-rate cap of 5.5 percent so the district could proceed quickly if market conditions required.
Board action and next steps: The board adopted the order authorizing the issuance and sale of bonds under the parameters. Staff said they plan to pursue a sale and schedule closing as soon as possible so the district can complete required bond payments and qualify for the SB4 hold‑harmless component. The board also authorized administration to prepare required notices and hold a public hearing on the budget and proposed tax rate on Aug. 25 ahead of final budget adoption.
Ending: District finance staff and advisors stressed the trade-off between locking favorable market rates now and continuing to monitor market movement; officials said they would return with the definitive sale results and timing once the sale parameters are executed.
