Rockwall ISD board extends Wells Fargo standby purchase agreement for 2006 variable‑rate bonds

The Rockwall Independent School District Board of Trustees voted to extend for one year the standby bond purchase agreement tied to the district’s outstanding 2006 variable‑rate bond issue.

Jeff Robert of Hilltop Securities told trustees the district originally sold $32 million of variable‑rate bonds in February 2006 and about $27 million remains outstanding. State law requires a standby bank to provide liquidity if those bonds cannot be remarketed; the district’s existing agreement with Wells Fargo was set to expire.

Robert said the proposed one‑year extension increases the standby fee from 45 basis points to 55 basis points — a 10‑basis‑point rise — which the presentation estimated would cost roughly $4,000 and be payable from the district’s interest and sinking (I&S) fund. He also told the board that an interest‑rate swap tied to the 2006 issue limits options to convert the bonds to fixed rate and that the market termination fee on the swap would be about $2,700,000.

Trustee Stan Britton moved to approve the amendment; Dr. Bart Miller seconded. The motion carried by voice vote recorded as seven in favor, zero opposed and zero absent.

Board materials and discussion identified three practical considerations: (1) the standby bank is required by state law for remarketed variable‑rate bonds; (2) replacing Wells Fargo would likely require new legal work, which Mr. Robert estimated could cost in the tens of thousands of dollars in upfront legal fees; and (3) the swap tied to the bonds constrains a near‑term conversion to fixed rate because of the sizeable termination cost.

The board approved the extension as presented; no substitute standby provider was selected at the meeting.