Katy ISD finance staff outline bond parameters and long-term debt plan as legislature weighs homestead-exemption changes
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Summary
District finance staff and municipal advisors reviewed recent bond financings, proposed parameters for a second sale of the 2023 authorization (recommended $250M with an option to $450M), and warned that a proposed $40,000 homestead-exemption increase at the state level could tighten capacity; board discussion focused on hold-harmless eligibility and timing for issuance.
Katy Independent School District officials presented a long-term debt plan and recommended board parameters for a potential second sale of the 2023 bond authorization at the board's Feb. 17 work-study meeting.
Chris Smith, the district's chief financial officer, clarified how much the district controls in operating dollars and framed the debt discussion, noting that Katy ISD's operating funding per student is roughly $10,222 versus higher per-student totals that include non-operational revenue. Jeff Robert of Hilltop Securities reviewed last year's financings, including a $250 million authorization sold last summer and a late-year refunding that produced about $27.4 million in present-value savings.
Robert said the district is using conservative assumptions (roughly 3% near-term property-value growth for projections) and described parameters staff will request the board to set: authorization to issue the next tranche (staff recommended $250 million, with an option to increase to $450 million if financially advantageous), refunding thresholds (minimum 3% present-value savings), and a defeasance limit (up to $30 million) for paying down bonds early.
Multiple trustees asked how a proposed state change'increasing the homestead exemption by $40,000'would affect the district's ability to obtain state hold-harmless funding for bond authorizations. Robert and staff said whether new authorizations qualify for hold-harmless protection depends on final legislation and any cutoff dates in that law; if the law provides hold-harmless treatment, Katy ISD may choose to issue more bonds this summer, but staff will only advance the larger amount if it's financially advantageous.
Staff recommended the board adopt an order establishing bond-sale parameters and a reimbursement resolution to protect the general fund if bond cash is temporarily exhausted. Bond counsel and the district's municipal adviser were present for legal and market questions. No formal roll-call vote on a bond sale was recorded in the meeting transcript; presenters described these items as the first steps in a months-long issuance process and indicated that final amounts and timing will depend on market conditions and pending state action.
Next steps: staff will bring the bond-order resolution and related documents forward for board action when timing, market conditions and any relevant state hold-harmless rules are clear.