The Spring Hill School Board authorized a $39 million bond sale on June 27, paving the way for district-wide improvement projects approved by voters earlier in the month.
The board agreed to proceed with the bond sale following a presentation by Greg Vahrenberg, managing director for PiperJaffray, who said favorable interest rates and increased state aid would work to the district’s advantage.
Average interest rates for the scope of work have fallen from 4.6 percent to 4.24 percent, which would reduce projected interest payments by about $3.1 million.
“We’re currently at the lowest interest rate for bonds this year,” Vahrenberg said.
Vahrenberg added that state aid has increased from 38 percent to 45 percent, which would shorten the bond payment schedule by as much as a year.
“That’s a very significant jump,” he said.
In addition, Vahrenberg recommended that the district refinance its 2004 bonds for a savings of about $446,691.
Board members agreed to proceed with the bond sale, rather than risking a future spike in interest rates.
“If you sell the bonds now, it locks in the interest rate and you won’t have to worry about fluctuation,” Vahrenberg said.
Nels Anderson, Eric Boyle, Bill Meek, Scott Oberkrom and Max Strausbaugh voted in favor of the sale. Chris King abstained. Chuck Willis was absent.
Voters approved the $39 million bond issue earlier this month by a margin of 1,722 to 1,375. About 47 percent of registered voters cast ballots.
The bond issue projects include:
• Expanding Prairie Creek Elementary School to a capacity of 528 students in the fall of 2012.
• A new 528-student elementary school on the existing 155-acre high school site, expected to be completed in the fall of 2013.
• Transforming Spring Hill Elementary into a pre-kindergarten to fifth grade facility in the fall of 2013.
• Converting the current intermediate school into a sixth grade building by fall of 2013.
The bond issue will also pay for safety enhancements in all schools, district-wide technology upgrades and various maintenance projects.
School officials say the bond issue will not result in a mill levy increase because of long-range planning, a 61 percent increase in assessed valuation over the past 10 years, and state aid that will cover 45 cents of every dollar spent.
The mill levy is projected to remain flat through 2024 and declines in 2025.
The repayment schedule is based on an estimated 0 percent enrollment increase over the next three years, a 3 percent increase from 2015 to 2016, and 5 percent thereafter.
Vahrenberg said he was comfortable with those projections considering the district’s history of double digit enrollment increases during better economic times.
He added that the BNSF intermodal complex in Edgerton would likely provide an opportunity for residential growth in Spring Hill.
“If you get back even half of (the enrollment growth) you had seven years ago, 5 percent would be conservative,” Vahrenberg said.
The bonds are expected to be sold in July.
Superintendent Bart Goering said the Prairie Creek addition would be the first bond issue construction project to get underway.
“We’re going to have to be aggressive on that one to have it open a year from now,” he said.