Archive for Thursday, June 21, 2007

Board picks bond date

June 21, 2007

Mark Nov. 6 on the calendar.

On that day, Eudora USD 491 will put a $45 million bond referendum before voters.

The Board of Education approved the date as well as the language for the bond question at its monthly meeting June 14.

The resolution, if accepted by the State Board of Education, also allows the district to take on more bonded debt.

"This is an exciting project," financial advisor Steve Shogren said. "This is the start of it if the board takes the necessary action."

The proposed issue will include several projects including the construction of a new first- through fifth-grade elementary school. The bond will also include improvements to Eudora Middle School and Eudora High School as well as the construction of a new district stadium. As part of the bond, Eudora West Elementary School will be turned into a preschool and kindergarten attendance center.

Shogren, an advisor for George K. Baum and Company, led the board through the financial aspects of the referendum.

Bond interest rates have been fluctuating recently, Shogren said. His company recently sold a bond issue for a different district at about 4.3 percent.

For Eudora's bond issue, his company drew up the numbers with a projected 5 percent interest rate.

"I want you to know we always try to be conservative with our plan," Shogren said.

Shogren's plan is based on the assumption the districts' assessed value will increase by 7 percent each year. The district's assessed value grew on average close to 10 percent the last four or five years, Shogren said.

The five percent assumption is consistent with the growth of the city's economy, he said.

The bond itself would be distributed to the district in four equal payments of about $11.25 million each, Shogren said.

The debt from the new bond would wrap around the current debt from the last bond issue.

This year, the district levies 20.67 mills of taxing authority to cover the bond payments.

To pay off the bond issue, Shogren predicted the district would increase its taxing authority to about 21.97 mills.

"The net effect of the financing would be an increase in taxes of 1.3 mills over what taxpayers are paying this year," Shogren said.

The board could decide to eliminate the 1.3 mill increase by adjusting its capital outlay funds in the 2008 budget, Superintendent Marty Kobza said.

The district also is eligible for state aid on 23 percent of its bonded debt.

"We feel with the 23 percent state aid and also with today's relatively low interest rate, you can take on a major capital improvement program with a minimal tax increase," Shogren said.

Board member Kenny Massey asked the board if the description of the bond question was accurate. The other board members had nothing to add to the phrasing of the bond question.

The board unanimously agreed to pass the resolution.

In a separate bond discussion, the board considered whether to push ahead with detailed project drawings by bond architect DLR Group.

By doing so, construction could begin earlier if the bond issue passes.

"If you want them to move forward with the detail design you would, in essence, have to incur the expenses of those detailed designs," Kobza said.

The designs would cost the district approximately $300,000 due in December if the bond issue fails, Kobza said.

No representative from DLR was present at the meeting. The board decided to continue the discussion at a later date.

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