Board updated on middle school design; officials outline bond revenues, contingency options

Superintendent Tony Mann updated the Molalla River School District Board on Jan. 9, 2025, about progress on the middle school capital project and the district’s bond finances, saying design work is moving from schematic design into design development and that the project remains on track and “on budget” within the published bond parameters.

Mann told the board the district’s bond issuance totaled about $77.6 million, issued on a 30‑year term at $1.55 per $1,000 of assessed value; that rate will step down in year 26 to about $0.81 per $1,000. He described three unexpected revenue sources that increased the project’s available funds: $7,130,000 in bond premium paid by investors at sale, an estimated $5,120,000 in interest earnings from investing bond proceeds in U.S. Treasury securities during the construction period, and a $6,000,000 state grant awarded through Oregon’s school construction grant process (referred to in the meeting as “awesome grant” funds). He said those items produce roughly $18.25 million in additional resources beyond the original $77.6 million bond proceeds and that the full budget publicly accounts for those dollars and includes contingency line items.

Mann said the district faces several choices for unspent funds once design and contracting are complete: hold contingency to cover unforeseen construction escalation or municipal infrastructure costs, invest in additional building features (for example, resurfacing the track or enhanced fencing), spend additional dollars to raise seismic performance to a community-grade shelter standard, or use unspent bond proceeds to pay down debt early. Mann said the district will negotiate with the City of Molalla over infrastructure costs that could be substantial — he cited a city estimate near $3,000,000 — and emphasized the board will retain decision authority on how any additional revenues are applied.

Mann and board members discussed constraints on how funds may be used. He said the $6,000,000 state grant must be spent on the middle school project and cannot be reallocated to debt service; other bond proceeds and earnings either must be spent on the project or refunded to investors under federal rules. He also noted federal arbitrage rules cap how much interest earnings the district can retain on bond proceeds.

Mann said the project team recommended bringing the board additional visuals and detailed design at a special meeting on Jan. 30 and at a community event in February, with the bond oversight committee receiving the same materials. Pence Contractors was identified as the selected general contractor/construction manager at the conclusion of the competitive process that interviewed five finalists.

Board members asked that future progress reports tie back to the $77.6 million bond principal plus the $6,000,000 state grant for regular updates on scope, schedule and budget rather than to the larger contingency-inclusive budget figure.