PC School Board Considers Finance Alternatives For Masterplan Projects
The Park City Board of Education today will get a presentation on different financial alternatives to pay for the district’s masterplan projects – totaling nearly $122 million.
There is no staff report or background analysis for today’s discussion, but the school board packet contains a 30-page power point presentation from bond consultants Gilmore Bell and Stifel whose representatives will explain that school districts only have two options when it comes to project financing.
As we’ve reported, the district is considering some $200-million dollars worth of projects – to be phased in over time. Projects range from expanding the high school to allow 9th graders to return to building a new CTE wing and expanding Ecker Hill to allow for 8th graders. All four of the elementary schools also need to expand to allow for Pre-K and support services.
A school district is limited to just two types of project financing: general obligation bonds which must be approved by voters – or lease revenue bonds, which do not need voter approval. Rather than increasing property taxes – which must be approved by voters – lease revenue bonds are repaid by annual appropriations from the general fund. General obligation bonds save taxpayers money because they have the lowest interest rates.
If the school district wanted to use lease revenue bonds rather than holding a bond election, which could be turned down by voters, it would need to adopt a resolution creating a Local Building Authority or LBA.
School Districts across the state of Utah have issued lease revenue bonds for projects. Park City is looking at financing about $122-million worth of projects. The bond consultants show that Alpine School District has the highest amount of lease revenue bonds for $19 million. The district is paying nearly 3.25% in interest for the bonds that issued in 2018.
In its written presentation for today’s meeting, the consultants note that lease revenue bonds could be faster if the political environment would make an election difficult. They also caution the school board to be conservative with the bond amount and not get carried away.
Lease revenues bonds are expensive. Besides higher interest rates, lease revenue bonds also pay what’s called capitalized interest and the district’s capital levy would be tied up over the long term.
All of the models show the construction being completed by 2026 and lease revenue bonds being paid for through 2043.