Franklin Regional board may combine final 2 borrowings for Sloan project

Franklin Regional School Board members got an early look at what may be the final bond issuance to finance the Sloan “elementary campus” project, a proposal that would combine the final two issuances to take advantage of all-time low interest rates.

The board will consider a $15 million bond, the balance necessary to complete the projected $54 million Sloan campus, at its Sept. 21 meeting.

Bond consultant Chris Bamber of PFM Financial Advisers said, with continued economic uncertainty over the impact of the covid-19 pandemic, “it makes sense just to finance the balance of the project, given where interest rates are.”

Bamber said some school districts are considering merging several years’ worth of future borrowing to leverage the current market.

“So, it’s prudent for the board to get this done, one and done, and lock it in, so we know what we’re getting in case rates start going upward in the future,” board member Ed Mittereder said.

If the board opts to move ahead with the bond issuance, it will approve a parameters resolution on Sept. 21.

“You build the box that the financing must fit in, and that gives us direction to go and execute the bond issue,” Bamber said. “As long as it fits in that box.”

In this case, the “box” would see roughly $850,000 in debt service spread out over the first two years, followed by steady annual debt service of about $830,000. The box also includes a maximum principal of $17.5 million and a maximum interest rate of 5.5%, but Bamber said both of those are to satisfy requirements of the state’s Department of Community and Economic Development.

“We’d obviously hope and expect to come in well south of that,” he said.

Superintendent Gennaro Piraino said he also hoped that, if approved, the interest rate could essentially be locked in before the 2020 general election, owing to traditional market volatility as a presidential election date approaches.

“Strategically, we’re counting on you as our financial adviser to get that done,” Piraino said.

Board member Mark Kozlosky said he looks forward to the district’s debt service reaching a “steady state” in 2024, when annual payment amounts on the district’s bond issuances are roughly the same year over year.

“If you look at how our budgets have grown, that will probably put our debt service around 4.9% of our total budget, when you’re talking about a $66 million budget,” Kozlosky said, adding that, once the Sloan project’s debt service is a steady figure, the district can better address other building and maintenance issues identified in the its 2016 feasibility study.

“There are other buildings that will need taken care of,” board member Scott Weinman said. “That’s where our long-term planning has to come into play, from a curriculum perspective, from a salaries perspective. You have to have the bigger picture in mind, not just the debt service. … We do have to do the long-term planning piece.”

Board member Paul Scheinert agreed.

“I don’t think that our expenditures on things other than the Sloan project have kept up with what’s in the feasibility report,” Scheinert said. “I don’t think we’ve shortchanged anyone. We’re not spending at the rate that’s in the feasibility study, but the district is not suffering for it. Completing the financing of the Sloan project next year puts in place the possibility that we can have some wiggle room in the budget some years after that, to work on these other things.”

If the board approves the bond parameter resolution on Sept. 21, Bamber said he expects to settle it fully during the first week of January 2021.