Public Facility Corp. (PFC)
PfISD is exploring the option to create a Public Facility Corporation (PFC) to finance the purchase of a preexisting building that will be used as a backup for technology infrastructure, a professional development training center, and as a central district support center.
A PFC is a non-profit corporation that can issue lease revenue bonds allowing school districts to establish a lease-purchase agreement to finance real estate purchases. The PFC holds title to the land and facility and at the end of the payment period, the title would be transferred back to the district. The Texas Attorney General’s Office must approve a PFC and the Texas Legislature allows the use of PFC’s to give districts flexibility in funding facilities. Chapter 303, Texas Local Gov’t Code provides for the creation of PFC’s by political subdivisions such as municipalities, counties, housing authorities, special districts, and school districts.
The district has currently outgrown its technology space and has limited professional development meeting spaces available. The creation of a PFC would allow the district to use its strong AA+ credit rating in the investment market to obtain the lowest financing interest rate as compared to a traditional long-term lease.
Have other school districts created PFC’s?
Laredo ISD, Houston ISD, El Paso ISD, Judson ISD, Corpus Christi ISD, Harris County Department of Education, Brownsville ISD are among a list of school districts that have created PFC’s.
Couldn’t the district include this purchase in a bond referendum?
A bond referendum would normally be used if the district was interested in constructing a new facility. A real estate opportunity has arisen that potentially allows the district to purchase a pre-existing building thus maximizing our taxpayer dollars.
How will the district pay for the annual lease payments?
The annual lease payments will be paid for out of the districts operating budget. The district anticipated this potential opportunity and paid off a solar lease in the 19-20 school year to allow the flexibility needed in the operating budget for the PFC annual lease payment in the 20-21 and future budget years.
Will these lease payments take away operating funds for teacher and staff compensation?
No, the district currently invests 86% of its operating budget in payroll expenditures.
Will the district pay a high-interest rate for this lease?
The district currently holds an AA+ credit rating from Standard and Poor’s, one of the highest credit ratings in the state. This strong credit rating will create investor demand when the revenue bonds are sold in the open market due to our strong credit rating allowing the district to receive a very competitive interest rate compared to a traditional lease.
Do school districts enter into capital leases?
Leases are a financing tool that school districts use to purchase large dollar expenditure items allowing them to pay them off over a period of time. Examples of long-term leases school districts enter into are copier leases to finance copier equipment, technology leases to finance technology equipment and infrastructure, capital outlay leases to purchase school suburbans or maintenance vehicles and buses, and real estate leases to purchase property.
Why is the district purchasing this building?
The existing property the district is considering will serve as a backup for technology infrastructure, a professional development training center, and a central district support center which will serve the district through its rapid growth.
Will the district give the community an opportunity to learn about the proposed PFC and give input?
Yes, The board holds annual meetings. The board will cote on the corporate budget of a PFC at the September 18, 2025 board meeting.
Will this purchase cause the district to increase its tax rate?
This purchase will not cause the district to increase its tax rate.