Brownsville Texas ISD 


$25,770,000 Public Facility Corporation Lease Revenue Qualified School Construction Bonds, Series 2010

$15,400,000 Public Facility Corporation Lease Revenue Qualified School Construction Bonds, Series 2009


Estrada Hinojosa serves as Financial Advisor to the Brownsville Independent School District Public Facility Corporation (the “Corporation”) for the issuance of its $27.77 million and $15.40 Million Lease Revenue Qualified School Construction Bonds.   The Corporation was created to finance the construction of school facilities for the Brownsville Independent School District (the “District”).  The transaction serves as an example of how a new issuer was created to meet specific financing needs for the District. 

Unique Characteristics of the Transaction

  1. Established a new issuer
  2. Use of Qualified School Construction Bonds Allocations
  3. Use  of tax credit bonds and State aid to achieve lowest cost of borrowing

The two successful sales of Revenue Qualified School Construction Bonds allowed the Corporation to finance the construction, equipment and improvement of an elementary school on behalf of the Brownsville Independent School District (the “District”). The entity was one of the first Corporations in Texas to issue Lease Revenue Qualified School Construction Bonds to finance school projects.  

The District was one of only 100 school districts nationally to receive a federal allocation to sell Qualified School Construction Bonds (QSCBs), which paid a tax credit to bond holders under the guidelines of the 2009 Recovery Act.  The tax credit bonds helped the District attain low-cost financing for the much-needed elementary facility in 2009.  In 2010, new legislation gave issuers the option to receive a direct subsidy payment from the federal government in lieu of a tax credit to bondholders on its QSCBs.  The Corporation opted for the direct subsidy for its 2010 issue, which resulted in an overall True Interest Cost of 0.39% on $25,770,000 in par. 

In addition, the District submitted an application for Instructional Facilities Allotment (IFA) from the Texas Education Agency.  The IFA program provides funding for the purchase, construction, renovation, and expansion of instructional facilities and seeks to remedy the inequities in school facilities between the property-rich and property poor-districts.  The program provided 70% and 72%, respectfully, in funding assistance on the principal and interest for the life of the Corporation’s Bonds.  A district uses this funding to make debt service payments on qualifying bonds and lease-purchase agreements.   


QSCB Transaction Summary


Series 2010

Series 2009




Net Construction



True Interest Cost



Tax Credit Rate



State Funding




Due to the limited usage of QSCBs, in the municipal market, the underwriter, the Financial Advisor and the District made a strong effort to garner interest from investors.  At the time of issuance, QSCBs were issued with a tax credit making it a challenge to sell the bonds in the market.  New legislation modified QSCBs to direct payment subsidy, helping the liquidity of the bonds.

The transaction was innovative in creating the new Corporation, using the new tax credit structure, and qualifying for IFA program funding assistance.








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