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Franklin Board approves $145 million school facility bond sale after strong ratings and low interest bids
Summary
The Franklin School Board unanimously approved the sale of $145 million in general-obligation bonds for school facility improvements. The district’s credit rating rose to AA1 and lower-than-expected interest rates and a large premium reduced long-term tax levy costs.
The Franklin Board of Education on March 19 approved the sale of $145,000,000 in general-obligation school facility improvement bonds, series 2025A, following a day-of-sale report showing improved bond ratings, competitive bids and a larger-than-expected premium.
Board action came after district staff and municipal advisors described bond-market results that reduced the district’s projected borrowing cost. According to the report presented by Mr. Crombie and Jeff Seeley of Ehlers, the district’s rating was raised from Aa2 to Aa1 and the true interest rate for the issue came in near 4.1 percent, lower than earlier estimates. The advisors said those factors, together with a higher premium from bidders, translate into roughly $18 million in lower interest costs to taxpayers over the life of the bonds compared with the original estimate.
Why it matters: The bond proceeds fund the district’s voter-approved facility improvement program. A stronger credit rating and lower borrowing costs reduce the district’s long-term levy impact and increase the funds available for construction and renovation.
The presentation and board discussion District staff provided a summary of the day’s sale report. Mr. Crombie explained the Moody’s rating action and cited stable fund balances and debt management as key factors behind the upgrade to Aa1. Jeff Seeley, the district’s municipal advisor, noted the strong competition at the sale, the favorable interest-rate result and a premium that exceeded expectations by roughly $3 million, further lowering net borrowing costs.
Board members asked technical questions about call dates, the possibility of splitting the borrowing into multiple issues and arbitrage implications. Advisors said the first permitted call date is April 1, 2033, and explained why a single combined issue produced better net financial results than splitting the authorization into separate issues. Advisors also summarized the district’s arbitrage exposure given construction timing and federal tax rules.
Formal action and vote The board voted by voice to adopt the resolution awarding the sale of the $145,000,000 general-obligation bond issue. The roll-call style voice vote as recorded in the minutes registered ayes from Mr. Sprague, Mrs. Witkowski, Mrs. Yank, Mrs. Zipperzke, Dr. Khan, Dr. Beier and the presiding official; the motion passed.
Implementation notes Staff said closing will follow standard post-sale procedures and that project spending will follow the construction schedule; advisors and district staff will monitor investment income and arbitrage rebate obligations as the projects enter active construction.
Ending The board directed staff to continue coordinating with the district’s owners’ representative, architects and the city on permitting and timelines for individual construction projects funded by the bond sale.
