San Angelo ISD shifts bond-sale plan to capture state 'hold harmless' under Senate Bill 4

San Angelo ISD trustees heard a bond-finance update during the district's pre-agenda workshop focused on maximizing state compensation created by recent legislation.

Jeff Roberts, a bond adviser with Hilltop Securities, told the board that Senate Bill 4 raises the homestead exemption from $100,000 to $140,000 and that the law will reduce the district's taxable value. Because the statute provides a timed "hold harmless" payment for bonds sold and closed before Sept. 1, 2025, Roberts said the district should aim to sell as much of its authorization as possible before that deadline to capture state offset funding. "This exemption will likely result in a decrease in the district's taxable value of somewhere between $650 and $700 million," Roberts said. "If we're able to do all of it ... we're talking about close to $80,000,000 of hold harmless funding."

Roberts said the district's team originally planned multiple issuances but is pivoting to a single, larger sale where feasible so the district can maximize the state hold-harmless payments rather than shifting the burden to local taxpayers. He gave a current market estimate of about a 4.9% interest rate and described the tool the board will be asked to approve next week: a parameter bond order allowed under the Government Code that delegates final pricing authority to district officials (typically the superintendent and chief financial officer) so an issuance can proceed on favorable market days without waiting for a board meeting. "Our goal is going to be to issue as much of the authorization as possible in order to maximize that hold harmless amount," Roberts said.

Roberts outlined mechanics and timing: a hypothetical July 8 sale, closing by early August and an explicit drop-dead need to sell and close before Sept. 1 to capture the state protection. He also explained the board can adopt a "not to exceed" principal amount and that district staff would bring final pricing back to the board if market conditions or amountable parameters require it. Trustees asked questions about refinancing windows and how quickly the district could re-open the market if rates fall; Roberts said typical call provisions would likely make tax-exempt refunding feasible roughly nine to ten years after issuance or sooner if taxable refinancing becomes advantageous.

Why it matters: capturing the hold-harmless funds would reduce the amount local taxpayers must make up if property tax base falls due to the homestead exemption change. Trustees discussed timing and the need to keep the tax rate promise made to voters while maximizing state funding.

The board did not take a final vote on a bond sale at the workshop. Roberts and staff said the board will consider a parameter bond order at the district's next regular meeting and that, if approved, the delegation would let staff finalize sale pricing if market conditions are favorable prior to the next board meeting.