Kyrene officials outline plan to sell $43M in new bonds and refinance $43M to save taxpayers about $2M

Kyrene Elementary District officials presented a plan on Feb. 11 to seek authorization at the boards Feb. 25 meeting to sell roughly $43 million in new general obligation bonds and simultaneously refinance about $43 million of outstanding debt, a move district staff said could save taxpayers about $2 million.

The bond presentation outlined how the two-part plan would both fund upcoming capital projects and reduce interest costs on callable bonds, while keeping the districts projected bond indebtedness well below statutory limits.

Associate Superintendent Chris Herman framed the proposal as informational and said a formal authorization would be brought to the board on Feb. 25. "This proposed bond sale would be for 2 purposes, 2 separate purposes," Herman said, describing one sale for new projects and a separate refunding to capture lower rates. Mike LaValle of Stifel Public Finance told the board the districts high credit ratings would help secure competitive interest rates.

District officials said the $43 million of new proceeds would target projects in the 2025-26 and 2026-27 capital plan, and the refinancing would target about $42.7 million of callable bonds issued in 2015. Herman said combining the sales lowers overall issuance costs and allows the district to use some carryover funds to cover an estimated $68.0 million of prioritized projects across the two years. "That refinancing activity . . . would entirely be for the benefit of taxpayers as Kyrene would not receive any of those proceeds," Herman said.

Herman gave a breakdown of planned spending categories: roughly 78% of the new-money plan is for maintaining schools (construction, HVAC, roofing, carpeting, weatherization and similar projects), with the remainder for transportation (bus replacements) and administrative/facilities work at the district office. He said about $10 million of the bond request would cover student laptops and devices, $7 million for classroom presentation systems, about $1.5 million for fire alarm and security systems, and roughly $3.5 million for other infrastructure.

Mike LaValle, managing director at Stifel Public Finance, showed municipal market curves and said Kyrenes split triple-A/AA ratings should produce relatively low borrowing costs. Using current market estimates, he presented an estimated gross savings to taxpayers of roughly $2.2 million from the refunding and said the refunding would not extend the original paydown schedule. "The old debt has about average interest rate of about 4.16%, and we're hoping to lock in somewhere around 3.2%," LaValle said.

Herman also reviewed legal and procedural constraints: bonds authorized by voters must be issued within 10 years of the election and proceeds spent within three years, and state law requires an annual public meeting about unspent bond proceeds. He said Kyrenes current bond indebtedness ratio is about 3.87% and would be an estimated 4.78% after the proposed sale, safely below the statutory 7% threshold that would restrict school plant fund uses.

Timing presented to the board called for a Feb. 25 authorization vote, an early-March sale if authorized, receipt of proceeds in early April, and completion of refunding activity in early July. Herman noted the board would retain the option to postpone or terminate issuance if market conditions changed.

Board members asked how bond proceeds could interact with special education capital needs; Dr. Sandra Lane (special education leadership) and Herman said federal IDEA (IDEA/Title I-B) grant money covers some high-cost special-education items but that certain capital items are already funded or could be funded from bond proceeds when appropriate. Herman said the district carries a capital contingency (about $1 million annually) for unforeseen needs.

The presentation closed with board members thanking the finance team and Stifel; there was no vote on the matter that evening. Herman reiterated that the Feb. 25 meeting would include the authorization resolution for board action.