In August 2019, Uplift Education issued just over $91 million in bonds, consisting of about $24.8 million of tax-exempt bonds and $66.3 million of taxable refunding bonds. Arlington Higher Education Finance Authority was the issuer, Robert W. Baird & Co. served as underwriter, Quarles & Brady served as underwriter’s counsel, Winstead PC served as borrower’s counsel, and McCall Parkhurst served as bond counsel. Buck Financial Advisors has served as FA to Uplift since 2009.
Uplift was created in 1996, and currently operates 40 schools on 20 campuses and serves about 20,000 students in the DFW metroplex. All of Uplift’s high schools are International Baccalaureate authorized for the rigorous Diploma Program, and almost 100% of its middle schools are IB authorized. Uplift Lee also co-locates with Lee Elementary in the Grand Prairie ISD in a highly innovative partnership that actually serves kids. This partnership has been so successful that in August 2019 Uplift and Grand Praire will open their second partnership school, Uplift Lee Secondary.
The new-money bonds were used to fund construction of a new facility for Ascend Primary, preliminary work for Elevate Primary, acquire previously leased land for Summit Preparatory, and various other projects on existing campuses. The All-in TIC on the tax-exempt bonds was 3.33% for a 35-year final maturity, which is just insanely low. These bonds were sold the week in which the yield curve first inverted, causing quite a tumble in the stock market. Volatility ruled that week, with the 10-year Treasury bond yield bouncing down to 1.60% early in the week before raising back to about 1.78% on the day of pricing. So did a $1 billion Dallas – Ft. Worth taxable revenue issue leave a wake to maneuver around.
The taxable refunding bonds were used to refinance the callable bonds of Uplift’s Series 2012 issue. The taxable nature of the refunding bonds is due to the loss of tax-exempt advance refunding capabilities in the 2017 tax reform act. We had been tracking the potential for the refunding for a while, and as recently as the week prior to the sale were somewhat ambivalent about it. But, with the crazy market reaction to the inverted 2-10 year yield curve, the benefits of the refunding escalated quickly, resulting in just under 13% present value savings. Annual savings total approximately $575,000 which will be used in the classroom instead of going to investors. The Boy Scouts are right – be prepared! We were, and were able to take advantage of the market to benefit Uplift.
This issue marks just the latest in a series of issuance by Uplift Education where the bonds happened to be sold in a very low interest rate environment. We aren’t quite sure why this seems to happen most years, but if you are considering entering the bond market, you might want to check with Uplift in the future (or me) to see when they plan to go to market. There are at least a couple of other items Uplift also seems to get right concerning how to best educate students, and you might want to check those out, too!
Congratulations to Uplift Education, and the students and families they continue to serve so well.