Opposition to Katy ISD’s $99 million bond voice concerns

Opponents of Katy ISD’s $99 million bond package are comparing the district to President Obama’s federal administration.

 

Headed up by Katy LiberTea, the group holds a variety of different grievances with the bond package. Mainly, they believe Katy ISD formulated their plan without enough input from taxpayers. Other gripes include a stadium that is too large, and an Agricultural Sciences Center that overcompensates.

 

“We don’t want to go into debt over a second stadium,” said Cyndi Lawrence, former president of Katy LiberTea. Lawrence said that leading up to the election, Katy LiberTea has posted signs that read “Obama, D.C.; Katy ISD; Spend, Baby, Spend.” She believes if the bond passes, Katy could “drown in debt.”

 

The group held a town hall-style meeting at Falcon Point Country Club on Thursday, Oct. 17, to debate the bond issue. On the opponents’ side sat George Scott, a blogger that runs the website GeorgeScottReports.com, as well as Darcy Kahrhoff, current Katy LiberTea president. Scott is unaffiliated with Katy LiberTea.

 

Originally scheduled to argue in favor of the bond was John Eberlan, but Eberlan cancelled at the last minute and in his spot came Terry Huckaby, member of Katy ISD’s board of trustees.

 

Kahrhoff stated a prediction that soon, KISD will propose another bond for school construction, which will cause the district to raise the debt services rate of 40 cents per $100 valuation. Kahrhoff also talked about a fear that her children’s education quality could be diminished as the district acquires more debt. Scott, on the other hand, said that while he believes the district may need a second stadium, he thinks the plans for a 14,000-seat, $69.5 million stadium are too big and too expensive. One audience member also noted his displeasure with the district after suspending bus service to his child’s school before proposing the bond.

 

Huckaby advised attendees that despite the bond’s possible passage, Katy’s tax rate is not predicted to change. According to Huckaby, opponents have not voiced any concerns at KISD board meetings.

 

KISD has a bond rating of AA+ by Standard & Poor’s and AA2 by Moody’s Investor Service. These ratings mean that Katy has a history of managing bonded debt very well and if the bond referendum passes, Katy’s bonds will be sold at an AAA rating, according to Katy ISD CFO Bill Moore.

 

“We think these are conservative numbers,” Moore said. “(I) see no reason why the tax rate should go up in the next couple or three years — it will actually start going down as the debt is paid off until the next bond election comes along.”

 

Moore also explained that KISD runs through many different models and scenarios with financial advisors to get a clear picture of what the district can afford. The first step is looking at the district’s taxable values, on which Moore and crew try to make a conservative estimate.

 

“We’re looking at increasing values about $1 billion per year,” Moore said. The taxable value grew by $2 billion in 2013, according to Moore. After that, asset ‘lives’ are assessed, which matches the life of the bond with the life of the asset.

 

From the perspective of selling bonds, Moore said that their studies account for an increased interest rate on the bonds they are selling. Then after projected interest rates are applied to the bond being sold, researchers are able to figure out Katy’s debt — the total amount paid over the life of their bond.

 

Finally, debt is allocated on an annual basis, which allows KISD to set the debt service tax rate.

 

“The whole structure is that as you pay off bonds, you’re allowing yourself capacity for the next round of bond sales if the district continues to grow,” Moore said. “If the district doesn’t grow, then you don’t have the buildings, you don’t have the bond elections and you don’t have to have the bond sales. It’s all contingent on growth, and the idea is to maintain the tax rate through all of this.”