Clarkston board approves 2025 bond sale after advisers report strong demand and favorable pricing

The Clarkston Community School District Board of Education on Aug. 11 approved a resolution authorizing the issuance and sale of the district's 2025 bond series 2, after financial advisers described strong investor demand and slightly better-than-expected interest rates.

The vote, taken by roll call, carried with all members recorded as voting yes. The action delegates sale authority and final pricing to the district's advisers and underwriter.

Why it matters: the sale affects how the district will fund construction and capital projects from the 2019 voter authorization. Presenters told the board the combination of sale proceeds and investment earnings could yield more funds for projects than originally estimated when the ballot was prepared.

In a presentation, RJ Naughton of PFM, the district's financial adviser, said Moody's assigned an A1 rating and the order period for the bonds was oversubscribed. "We were oversubscribed in all maturities," Naughton said, and the true interest cost tightened modestly during the order period. He reported a combined average interest rate for the two series that was lower than the original plan.

Max Hutchen of Huntington Capital Markets, the underwriter, told the board institutional investors placed large orders and the issue was two to 10 times oversubscribed in various maturities. "We had $602 million in orders for a $119 million issue," Hutchen said, identifying firms including Fidelity, Vanguard and State Farm among large buyers.

Presenters described the practical results: the issuance in two series (rather than an earlier plan for three) reduced issuance costs and, based on projected draw schedules and interest earnings, produced an estimated amount available for projects of about $210,069,000 compared with the ballot's estimated project amount of $197,500,000 — an increase the presenters described as approximately $12.6 million. Naughton cautioned the estimate depends on the pace of draws and interest earnings.

Naughton also summarized final pricing figures presented to the board: the first series priced at about 3.93% and the second at about 4.64%, producing an average near 4.39% across the two series, modestly better than earlier estimates.

Board members asked about the choice to issue the remaining authorization in two series instead of three. Advisers said the main trade-offs are interest-rate risk and timing: issuing now avoids the risk of higher rates later and saves on issuance costs, while compacting the time frame to spend bond proceeds and meet bond draw requirements.

The motion was introduced as a resolution authorizing the issuance and sale of the 2025 bond series 2 and carried on a roll call vote. The board also later approved a separate repayment resolution for the School Bond Qualification and Loan Program related to the bond financing.

The board will receive bond documents and pricing summaries from PFM and Huntington, and staff noted monthly draw schedules submitted to the State to confirm spend-down requirements.

Ending: presenters and board members said they would circulate slides and documentation to the board. The district scheduled no additional action on the bond sale at the meeting; the approvals completed the authorization and sale delegation process the advisers described.