Marfa ISD refinances portion of its debt, saving $300,000

By JEFF MATHEIS

MARFA – Marfa school board members on Monday voted unanimously to refinance $1.7 million of the school’s debt, saving MISD taxpayers $300,000 over the next 20 years.

Trustees also set a plan in motion by Superintendent Andrew Peters to vacate three buildings housing high school art classes, district administration, and the technology office, move them to the underutilized junior high school wing, and renovate those three detached buildings for teacher housing.

Duane L. Westerman of SAMCO Capital Markets presented the specifics of the bonds issued to MISD. The 2003 bond has a call option that can be refunded for savings after the ninth or tenth year. Refinancing can be done only once.

Current interest rates are historically low, according to Westerman, so now is the time to consider the matter. Refinancing the bond now would provide a 14.97 percent savings. The plan has an upfront savings structure that would benefit the district’s debt service and save taxpayers from two to three cents per $100 valuation on the interest portion of the property tax.

In the first seven years of the reissue, savings to the district would range from $68,000 to $29,000 annually. The interest savings decreases after that until the bond is retired in 2036.

The existing interest rate on the refinanced bond ranges from four percent to 5.5 percent. Westerman’s firm indicates they can reduce the interest to 2.69 percent.

“The interest rates have gone down, creating this chance to save money. This will not extend the life of the bond and the district does not have to come up with any cash to complete the issue,” said Westerman.

Marfa ISD board decided that now is the right time.

“In the past when we have looked at refunding we have tried to get at least 3 to 5 percent savings,” Superintendent Peters remarked. “We have to get the rates down so it doesn’t hurt us in the pocketbook. It’s kind of a no-brainer.”

Refinancing was not effected the day of the meeting. Rather, the action delegates to Peters, Chief Financial Officer Vicki Sanchez, and Board President Robert Halpern the authority to approve refinancing without delay, at any time, under the final pricing.

Westerman expects to get this done within 30 to 60 days. The action includes limitations taking the deal off the table if the savings is not more than 5 percent.

The board’s pleasure with the proposal was summed up simply by Trustee Cosme Roman who stated; “This is a good time.”

Another of Peters’ initial forays to reduce the district’s $615,000 budget deficit may include getting into the housing business. The buildings housing high school art classes, district administration, and the technology office will be vacated. Considerations were made for office or commercial space, but that didn’t appear to be as viable, because of zoning and marketing issues. Converting the space to housing, especially as teacher housing, was considered the best option.

“Utilizing the buildings as teacherages does two things: It saves money and it brings in help for our teachers by saving them fuel and time,” said Peters.

About 60 percent of the MISD teaching staff don’t live in Marfa. Peters said he hopes the single teachers who haven’t established families in Alpine or Fort Davis will consider renting from their employer.

There will be costs for the work to convert the buildings into housing.

“Where will we get the money for the upgrades?” asked Roman.

“You’re going to have to dip into the reserves. That’s why I want to be real sure,” answered Peters.

The board consensually agreed to move forward with the plan. Estimates of conversion costs and revenue generation are being made. There will be more specifics next session.

The plan is to create several apartments in both the administration and arts buildings.

Peters said he hopes the move to the junior high wing will occur by year’s end.

In other business, the board conducted a public hearing on Academically Unacceptable status of the district’s two campuses and approved the improvement plans for the campuses and the district.

Texas Education Agency monitor Ricardo Torres was present and complimented administration and the teaching staff. “It’s been a real privilege to work with your administrative team. This district has a commitment toward improvement from its teaching staff and its administrative staff. They don’t relish being on AU.”

Torres cited actions such as putting more high school kids than required on the academic help list as evidence that MISD cares about the success of every student and is focused on progressing up from the Academically Unacceptable rating.

In other business:

- The board voted to update a local policy thereby eliminating three days of testing.

- Halpern reported that trustee Teresa Villarreal Ontiveros intends to resign at the November meeting because she has moved to Alpine.

- The board reviewed the policies of the selling of surplus goods. Plans are underway to sell unneeded items including old buses, computer equipment, and furniture.

- Trustees learned that the Marfa Junior Senior High School open house will be November 15. The Elementary open house will be October 25 and will include a book fair.

- Enrollment was reported and MISD is currently down 30 students from the end of last year.

- The Highly Qualified teachers report was presented.

- The board entered into two-hour training facilitated by Peters on the Texas Education Code.