Monthly Archives

June 2020

MORE Momentum: Real Estate

By | News

Huckabee’s most recent on-demand webinars highlight the state of the market in three key areas: Bond Sales / Financing, Real Estate and Construction. The second of this series looks at the real estate market with a focus on selecting and purchasing land for new school buildings.

Our guest is George Curry of JLL, a commercial real estate firm. George has helped Texas public school districts locate and purchase land for dozens of schools (elementary to high school) over the last several years. George is joined by Gary Rademacher, a Principal at Huckabee, who has served as an architect for Texas school districts for nearly 30 years.

We’ve broken out each question for MORE Momentum #5: Real Estate below. You can view the webinar in its entirety by clicking here.

Introduction

Since the start of the pandemic, what are you seeing in the real estate market? Clients are asking how the pandemic will impact their ability to negotiate and purchase land. Is now a good time to buy?

There hasn’t been much of a change to this point. Up until March, the market was hot and Texas was doing well. It has certainly cooled some, but we haven’t seen any changes as far as land prices are concerned. 

In DFW, we continue to have a good market. Globally, as far as Texas is concerned, DFW, Austin and San Antonio are steady, but Houston has taken it on the chin. They’ve been hit with a double whammy from the virus and low oil prices.

Advice for School Districts

Buy Buy Buy! The market has been strong over the past 3-5 years and prices are continuing to escalate, especially around major metroplexes. There may be a small window in the next 3-12 months where prices may not go down, but instead, may take a pause. It’s a good time to lock down sites which may go up in price over the next few years. 

Working with Developers

Recently, developers seem more willing to donate land if they have a mega-site, somewhere between 200-500 acres for a development. However, with smaller acreage sites (100-200 acres), developers aren’t as willing to give land freely for schools. There’s been more resistance to donating land as homes sales have been strong.

Selecting the Right Piece of Land

The school site is important to school districts for many reason. When a school district is receiving donated land or purchasing land, they are making decisions about property that will serve them for decades. What should school districts focus on when considering a purchase?

People look for the best price or low cost, but I advise clients to get the right location. Get the best site near or in the right location and then try and get the best price you can. Some developers will go to a district and donate land, but the site is in a corner, or it’s too small or it’s got topography issues. This means that sometimes the free sites are the most expensive to develop. We try to focus on the best site in the development, and sometimes it doesn’t work out with donated land.

What else are you looking for?

Location is one of the most important things. We’ll meet with demographers and see where the growth is coming from. We’ll then search and try to find a site or multiple sites that could work in the area. Once you’ve identified a site, there are several things to consider: acreage, type of school and amenities, net usable acres, etc. It’s a good time to bring in partners, such as a civil engineer, to assess the site and estimate costs for development.

Additional Advice

Some of the most challenging sites have been the free or the “best deal” sites. Focus on the best site first, and then work on price. Price is about 3-8 percent of the total cost of a school, so you are dealing with a relatively small component of overall price. It’s critical to get it right. Having the right partners (real estate agent, civil engineer, architect) up front will help you down the road. Being diligent is important to respecting your taxpayers.

To learn more about JLL, click here.

About MORE Momentum

Huckabee’s MORE Momentum series highlights how our educational partners are investing their time, energy and focus to keep the momentum going during this unprecedented “pause.” We will explore themes related to bonds, planning, design and safety and security, among other topics that impact Texas public education. Follow us @HuckabeeInc on Facebook, Twitter, Instagram and Linked In, or complete the form below to get a first look as new content is released. 

For the full webinar, click below

Keep the momentum going!
Reach out to our Huckabee Communications team to learn MORE.

More Momentum
Sending

MORE Momentum: Bond Market

By | News

Huckabee’s next three on-demand webinars highlight the state of the market in three key areas: Bond Sales / Financing, Real Estate and Construction. The first of this series looks at the school bond market and the impact of COVID-19 on bond sales. Our guest is Derek Honea of RBC Capital Markets, a financial advisor and underwriter for public school districts.

Derek walks through the current state of the municipal bond market and the impact to school districts who are looking to sell bonds, move up the sale of bonds or refinance, as well as those concerned about underlying credit ratings.

We’ve broken out each question for MORE Momentum #4: Bond Market below. You can view the webinar in its entirety by clicking here.

Introduction

What are you seeing in the bond market today with the impact of COVID-19?

It’s rare to see the municipal bond market shut down. School districts couldn’t access the capital markets, and it’s one of the only times in the past couple of decades that we’ve seen this, except for in 2008 / 2009. We are through that time now and getting back to normalcy.

Interest Rates + Moving up the Sale of Your Bonds

The municipal bond market essentially shut down at the beginning of the pandemic. Today, it’s open for business as usual and rates are steadily returning to at or near all-time lows. It’s an attractive time to lock-in a long-term rate.

Determining if it’s the right time to move up bond sales and take advantage of the rates is case-by-case. Typically, clients fall into two camps: Fast-growth districts who have strategically timed out their capital improvement plans and districts who have bond authorizations approved but have flexibility in their timing to sell. Things we consider in either case include impact to current rates, taxable assessed values, enrollment and the economy.

Interest Rates + Refinancing

We operate in two markets: Tax exempt and taxable interest rates. Both markets were shut down for awhile; tax exempt markets came back much sooner. The taxable market is just now returning to where we were in February, and we are seeing a lot of interest in refinancing taxable rates. These look really attractive, and we are generating a lot of debt-rate savings for school districts. If we can capture significant savings for clients, we will recommend that they refinance now.

Bond Market + Assessed Values

There is increased demand from investors for Permanent School Fund guaranteed paper, some of the highest credit bonds on the market. These are especially appealing given what’s occurring with corporate debt and corporate credits becoming distressed. We are seeing crossover buyers and European buyers investing in taxable bonds. Over the short term, we don’t see this demand decreasing. We are in a stable spot for interest rates over the next six months, although the presidential election could impact the market, including state and local debt.

In regards to taxable assessed values, we anticipate a large protest process which may impact certified values. Values for this school year were assigned before the pandemic; next year’s values will have fully accounted for its impact. We are advising clients who have flexibility in their sales to wait and see what the certified values look like. This gives you more data when structuring the debt. There may be ongoing impact in the coming years as well, and this is something for school districts to consider as they are developing bond programs.

Underlying Credit Ratings

Outside of local issues, RBC has been asked about the impact of COVID-19 to a district’s underlying credit rating, which could increase borrowing costs in the long-run. The rating agencies have put out a lot of information on what the impact could be, but we haven’t seen many credit rating downgrades for Texas school districts. This is something to keep an eye on as the impact of the pandemic continues to flow through the market.

Final Takeaways

The market is open, and school districts who have needs, have a plan in place and feel confident about their local economy can lock in historically-low interest rates. For those who have flexibility, it’s a good idea to stay in touch with your advisors and demographer to asses changes to enrollment, local economy and community needs.

To learn more about RBC Capital Markets, click here.

About MORE Momentum

Huckabee’s MORE Momentum series highlights how our educational partners are investing their time, energy and focus to keep the momentum going during this unprecedented “pause.” We will explore themes related to bonds, planning, design and safety and security, among other topics that impact Texas public education. Follow us @HuckabeeInc on Facebook, Twitter, Instagram and Linked In, or complete the form below to get a first look as new content is released. 

For the full webinar, click below

Keep the momentum going!
Reach out to our Huckabee Communications team to learn MORE.

More Momentum
Sending

MORE Momentum: TxSSC

By | News

Huckabee’s MORE Momentum series highlights how our educational partners are investing their time, energy and focus to keep the momentum going during this unprecedented “pause.” We will explore themes related to bonds, planning, design and safety and security, among other topics that impact Texas public education. Follow us @HuckabeeInc on Facebook, Twitter, Instagram and Linked In, or complete the form below to get a first look as new content is released. 

We’ve broken out each question for MORE Momentum #3: Texas School Safety Center below. You can view the webinar in its entirety by clicking here.

Introduction

The Texas School Safety Center (TxSSC) released the “Education Facilities COVID-19 Recovery / Re-opening Appendix,” that serves as an addendum to the Communicable Disease annex (as part of a school district’s Emergency Operations Plan). This new document focuses on COVID-19 and offers comprehensive guidance to school districts related to the re-opening of facilities and development of ongoing safety measures. Each section addresses the impact to facilities, transportation and people.

It’s important to note that each individual school district has an opportunity to develop a unique response to COVID-19, and the Appendix can be adapted to local needs and priorities. Every campus and every community is different, and the guidance offered by TxSSC is a starting point that will need to be vetted, modified and approved locally before becoming part of a school district’s approach to combatting the spread of COVID-19.

In this webinar, we talk through some of the strategies that are likely to have the greatest impact in mitigating COVID-19. We also speak with school district administrators and personnel to understand the challenges and questions that may arise while exploring these draft guidelines.

Our Guests: 

  • Kerri Ranney, VP of Educational Practice at Huckabee and member of the TxSSC Board
  • Jeff Caldwell, Associate Director of School Safety Readiness at TxSSC
  • Pat Fowler, Infectious Disease Control Consultant, Teel Consulting
  • Dr. Fred Brent, Superintendent, Georgetown ISD
  • Denisse Baldwin, Principal, Purl Elementary School, Georgetown ISD
  • LaToya Easter, Principal, East View High School, Georgetown ISD

Consideration: Masks

Wearing masks is a good example of a strategy that a school district could evaluate and modify based on the priorities of their community. Our guests talk through the value of wearing masks while also considering the challenges and impact of this option when working with a larger, and younger, population.

Considerations: General Facility

It is not likely that every campus can, or should, do everything recommended in TxSSC’s guiding document. It is imperative that each school district determine the feasibility of the recommendations related to their community. In this section, we talk through general facility considerations such as disinfecting efforts, the use of hand sanitizing stations, the use of plexiglass and guidance from the EPA.

Considerations: Main Entry Protocols

Entry and exit protocols will differ between elementary, middle and high schools, as well as urban, suburban or rural schools. Considerations for mitigating the spread of COVID-19 should complement, and not deter, gains school districts have made related to safety and security procedures. Whether considering the use of multiple entrances, staggered start times or other methods, school districts should attempt to find a balance between these varying needs.

Considerations: Classrooms

There are many ways for school districts to utilize the classroom and campus if social distancing is implemented. In this section, we explore guidance related to the use of classrooms and some of the considerations and questions that go hand-in-hand with creative utilization. For more information on this topic, email info@huckabee-inc.com to gain access to Huckabee’s TASA Summer Conference presentation: Campus Utilization—Adapting Space to Meet Multiple Needs. 

Considerations: Hallways

There are many methods for limiting crowding in hallways without removing key social / emotional aspects of school or impacting instructional time. In their COVID-19 Appendix, TxSSC offers guidance on numerous scenarios that can be considered by elementary, middle and high school campuses.

Considerations: Restrooms

Several things can be considered when addressing the spread of COVID-19 within restrooms, including the emphasis of good personal hygiene, education of hand washing and sanitizing protocols, and reduction of contact points needed for access.

Considerations: Cafeteria

Guidance from TxSSC within cafeteria and dining spaces focuses on keeping students and employees safe. Considerations for school districts include exploring where and how meals are served and the implications to staffing and process. TxSSC also offers the idea of using a local health department to analyze and provide recommendations for best practices.

Considerations: Extracurricular Activities

Community and campus spread may impact how school districts restructure and/or resume extracurricular activities.

Final Thoughts

With guidance from TxSSC and others, we hope school districts have a good idea for how to start the conversation and develop their own plan to return safely to school. If you would like to discuss the TxSSC document, how to develop your own priorities or explore campus utilization, please contact Huckabee at info@huckabee-inc.com.

For the full webinar, click below

Keep the momentum going!
Reach out to our Huckabee Communications team to learn MORE.

More Momentum
Sending

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