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Board approves lease authorization to back roughly $23 million in Blue Valley Rec projects
Summary
The Blue Valley Board of Education voted to authorize two supplemental lease-purchase agreements that let the Blue Valley Recreation Commission back certificates of participation for improvements to a sports complex and the district activity center. Board approval was 7-0.
The Blue Valley Board of Education on Jan. 13 voted 7-0 to adopt a resolution authorizing two supplemental lease-purchase agreements that will let the Blue Valley Recreation Commission proceed with financing for facility improvements.
The authorization gives the recreation commission the authority to enter into the lease agreements that will underlie certificates of participation (COPs) to fund capital work. Shane DeWald, speaking for the recreation commission, told the board the financing request totals about $23 million, with "$9,000,000 of it go[ing] to the baseball, the sports complex" and "the other $14,000,000 of it go[ing] into the activity center." DeWald said the projects are intended to respond to program growth and to replace leased storage and substandard building components.
The board vote approved two supplemental lease-purchase agreements between The Bank of New York Mellon Trust Company, N.A., as trustee, and the Blue Valley Recreation Commission as lessee. Jody moved the motion and Clay seconded it; the motion passed unanimously.
During discussion board members and the recreation commission pressed on financing mechanics, tax and rate impacts and project timing. Treasurer/financial advisers explained the board was approving the lease that supports the COPs; the district itself will not be the obligor on the securities. A representative from the underwriting/financial team told board members that current indicative rates for a 20-year issue were in the low-to-mid 4 percent range (the presentation cited roughly 4.3% for a 20-year issue) and that debt service on the new financing would be about $1.7 million annually under current assumptions.
DeWald and other recreation commission representatives said the commission currently has a mill levy of 2.85 mills that funds employee benefits, capital and lease payments and that the COP financing is structured to level that levy over time rather than create upward spikes. Commissioners estimated repayment would run 20 years and said the commission would rely on its mill-levy revenue and other commission receipts to make the lease payments; the commission’s annual revenue was described as roughly $20 million.
Board members asked about collateral and ratings. Staff said the leases would be secured by the financed properties and that the commission expected a rating somewhat below the school district’s (the presenters mentioned an anticipated AA2 rating for the commission’s lease-backed securities). Board members also asked about the commission’s outstanding obligations (presenters cited Hilltop-related lease obligations as a separate existing financing) and the relative size of the tax base cited in the discussion.
The board’s action gives the recreation commission authority to finalize the lease agreements and proceed toward the COP sale on the commission’s timeline. DeWald said construction and use plans aim to complete the work within the commission’s stated multi-year schedule; the commission advised sale of the COPs is expected this spring. The district emphasized the board’s authorization applies to the lease that supports the COPs and that the district is not guaranteeing repayment of the securities.
The board took the vote after the discussion; the motion passed 7-0.
