School District explores bond and USDA funding options for $128M project

Funding options for the West Geauga Local School District took center stage at the Board of Education meeting on December 11, 2024. Heather Meyer Arling, a municipal advisor, presented a detailed overview of potential financing routes, focusing on a bond issue and a USDA loan option.

Meyer Arling explained that the bond issue would involve a significant financing team, including bond counsel and underwriters, to facilitate the issuance of debt necessary for district projects. The process is expected to take about ten weeks, culminating in a pricing day where interest rates will be finalized. She emphasized the importance of this day, comparing it to purchasing a car or house, where the rates set can significantly impact the district's financial obligations.

The bond issue is projected to have an interest rate of around 4.75%, with an estimated annual payment of approximately $6.2 million over 38 years. This translates to a millage rate of about 5.24, which would cost homeowners around $550 annually for a $300,000 home. Meyer Arling noted that a conservative approach to estimating rates is preferred to avoid potential increases in millage after voter approval.

In contrast, the USDA loan option, which could provide funding at a lower interest rate of approximately 3.875%, presents its own challenges. While it offers lower fees and the possibility of downward rate adjustments, it requires a more complex application process and has stricter regulations that could complicate project execution.

Meyer Arling concluded by highlighting the pros and cons of each option, noting that while the bond issue offers immediate funding and flexibility, the USDA loan could be beneficial if managed correctly. The Board is expected to make a decision on the financing route soon, with implications for the district's financial future and project timelines hanging in the balance.