North Alabama School Systems to Receive Proceeds for School Construction & Renovation

June 25, 2013 – Governor Robert Bentley on Tuesday announced that the Alabama Public School and College Authority (PSCA) recently completed the sale of $172.7 million of Capital Improvement Pool Bonds for the purpose of building new school facilities and renovating existing school facilities in areas of North Alabama that were impacted by the Base Realignment and Closure Commission (BRAC), which was authorized by the U.S. Department of Defense in 2005.

The majority of the bond sale proceeds will go to Huntsville City Schools, Madison County Schools and Madison City Schools.  Additional school districts are funded based on the number of people who live in those districts and commute to work on Redstone Arsenal.

“This will benefit students and teachers throughout northern Alabama,” Governor Bentley said.  “Cities like Huntsville, Madison, and many other communities, have seen tremendous growth as a result of BRAC.  Now, public schools in these communities will be able to make necessary renovations and additions.  We’re able to do this because of the state’s strong credit rating and sound financial management.”

Due to BRAC, nearly 4,500 new jobs were transferred into Redstone Arsenal.  Many North Alabama school districts were greatly impacted by surging enrollment as additional families moved into the region.  This created the need for more space and campus renovations as schools welcomed additional students.

Additionally, ancillary government contractors and suppliers followed the BRAC move, creating as many as 5,000 additional jobs.  According to the Huntsville/Madison County Chamber of Commerce, during the five years following BRAC, the Huntsville metropolitan area added more than 48,000 people in the areas surrounding Redstone Arsenal.

In total, 15 local boards of education will receive proceeds from the bond issuance.  In return, each of the local boards of education agrees to pay for 50% of the total future debt service, with the State agreeing to pay the remaining portion.

Due to a very favorable interest rate environment and solid credit ratings of AA+/AA/Aa1, the bonds sold on a competitive basis and well inside initial expectations.  The 20-year maturity Capital Improvement Pool Bonds sold in two series, Series 2013-A and Series 2013-B, with an average true interest cost of 3.62% for the A Series and 3.87% for the B Series.  Bank of America Merrill Lynch was the winning bidder for both Series of bonds.

In addition to Governor Bentley, other members of the Public School and College Authority include State Superintendent of Education Dr. Tommy Bice and Acting State Finance Director Bill Newton.

Dr. Bice praised the bond sale, saying, “We’re very pleased with the sale results and are excited to see the people of North Alabama benefitting from this funding for new school construction and renovation.  Given the natural inflation rate of construction costs and today’s ultra-low interest rate environment, there’s no better time to push forward with these projects.”

Bill Newton added, “The bond sale is great news for Alabama’s public schools.  This is a testament to the financial strength and conservative balance sheet of our great State.  During this difficult budget climate, we’re mindful of placing debt into service at the most attractive rates and terms possible.”

A listing of the 15 local school districts receiving funds from the bond sale is below.  Due to the premium paid for the bonds, a total of $175.0 million will be available for these districts.

• Huntsville City – $64,743,531.60

• Madison County – $55,914,868.20

• Madison City – $26,485,990.20

• Marshall County – $2,630,894.70

• Albertville City – $1,879,210.50

• Arab City – $1,127,526.30

• Boaz City – $977,189.50

• Guntersville City – $902,021.00

• Limestone County – $7,816,785.00

• Athens City – $2,746,438.00

• Decatur City – $3,660,873.90

• Morgan County – $3,328,067.20

• Hartselle City – $1,331,226.90

• Jackson County – $989,656.40

• Scottsboro City – $465,720.60

• TOTAL: $175,000,000.00