During the Levelland ISD’s School Board of Trustees meeting this past Wednesday, the group handled multiple items centered around property tax updates and proposed bond prepayment.
Perdue Brandon Fielder Collins & Mott LLP, is employed by Levelland ISD to provide services for delinquent tax collections.
A comparison of the 2023 Tax Year to the 2022 Tax Year will be presented. A discussion of the delinquent tax roll reduction was presented.
Presenting the LISD 2023 Tax Reduction, the 2023 Turnover in July 2024, totaled $314,272. The ’23 Turnover was $118,315 less than the 2022 Turnover in July 2023. The 2022 Turnover in July 2023, totaled $432,587. The 2022 Turnover has been reduced by $279,000 in the first 15 months.
The Total Delinquent Tax Roll for Levelland ISD as of October 5, 2024, totals approximately $931,492. Of that DTR total, $21,827 should be removed from the DTR per Section 33.05 Of that DTR total, $143,898 is in Active Deferrals. The “actual” Total DTR for Levelland ISD as of October 5, 2024, totals approximately $765,767.
Vince Viaille with Specialized Public Finance INC. will review the options available for bond prepayment.
Levelland ISD (the “District”) has Series 2012, Series 2013, Series 2019, and Series 2020 Bonds currently outstanding.
The District currently maintains an I&S fund balance of $3,026,985 and is anticipated to increase by $450,000 this year.
The District could use a portion of its existing I&S Fund Balance to prepay existing bonds, avoiding future interest. The remainder of the I&S Fund balance would continue to be maintained in the event of unforeseen circumstances.
The following analysis assumes the Series 2020 Taxable Bonds would be prepaid in part. By prepaying the taxable series, the District could maximize investment earnings, within the escrow, until the redemption date.
This method is subject to confirmation from Bond Counsel.
The prepayment would be placed in an irrevocable escrow until the optional redemption date on February 15, 2030. This escrow would be invested in US Treasury Bonds and the interest earnings from the escrow investment will be used to defease the bonds to the call date.
The Series 2020 Bonds are the only taxable bonds in the District’s portfolio. This allows the District to earn an unrestricted yield in the escrow. Today’s analysis assumes escrow earnings of 3.49%, until the call date in 2030, with total escrow interest earnings of $534,835. The interest earnings are used to further redeem bonds.
The other outstanding bond series are restricted, by the IRS, for the permittable escrow yield. For example, the Series 2019 Bonds (w/ the 4% coupons) are restricted to a maximum escrow earnings rate of 1.65%.
The proposed prepayment is structured so that the District will continue with its level annual payments in future Fiscal Years.
If the District were to prepay only maturities 2028 and 2029, for example, it would create a divot in the future FY debt service payments on the District.
The estimated bond repayment would be $2,847,410 which would go into an escrow account which would defease the bonds. During the meeting, the item was not considered an action item and will be brought back to the boards attention at a later date for any action to proceed with the repayment.