The St. Joseph School District, Mo., could be positioned for a new bond issuance in 2019 of up to $60 million if the Board of Education approves a prepayment on current bond debt next week.
The Board of Education will be asked next Monday to approve a $2.58 million advance payment on bonds issued in 2012 for the construction of two next elementary schools in a move that will save the district about $1 million in interest costs and could enable a future building program.
Approval won't bind the Board of Education from running a bond issue in 2019, but it would provide a future board that option, according to Superintendent Dr. Robert Newhart.
"It's a safety valve, so to speak, in that it allows the district the opportunity to go whichever direction they want to go in making future payments or running a new (bond) issue," he said. "By making a prepayment on the 2012 bond issuance, would allow the district flexibility to run a no-tax debt service levy increase ... for a future bond issue of roughly $50 million to $60 million as early as 2019."
If a future board would choose to run a bond measure in 2019, Newhart said it could go a long way to helping the district achieve its long-term facility goals.
"That's not going to necessarily build you a new high school, but that could go a long way in renovation, additions to your current elementary or middle schools," he said. "Really, the goal is to get a 12 elementary model, with K-5, and having 6-7-8 middle schools. So $50 million or $60 million would go a long way in establishing that type of setup."
As it currently stands, the district is scheduled to make interest payments only on the 2012 bonds through 2027, when principal payments begin. Approval of a $3 million principal prepayment would take care of the final principal payment, scheduled for 2032, as well as a portion of the principal payment scheduled in 2031.
The prepayment wouldn't actually take place until 2020, but authorizing it now has short-term implications as the district looks at setting its tax rate in August.
Newhart said the district expects its operating tax levy to fall by about 5 cents next year, and rolling in an early debt payment will allow it make up for that loss through an adjustment to the debt-service levy and ultimately maintain the district's current total tax rate.
"Your total rate, basically, will be the same," he said.
The last major bond issuance approved by the St. Joseph School District passed in 2012, when voters approved a $42 million bond proposal that funded the construction of two 75,000-square-foot elementary schools, as well as air conditioning in its other elementary schools.
That measure passed with an approval rate of 65.49%. According to News-Press files, it provided for the first newly built schools in St. Joseph in 40 years.
