Franklin County school board adopts preliminary bond, reimbursement and determination resolutions for $4.2 million project

The Franklin County Community School Corporation on Monday held a second preliminary determination hearing and unanimously adopted three resolutions that authorize the corporation to pursue up to $4,200,000 in bonds to finance prioritized facility repairs and bus purchases.

At the start of the hearing, a staff member, Mr. Gehring, explained the legal framework for the meeting: "Pursuant to Indiana code 20 dash 26 dash 7 dash 37, Before a corporation may spend more than a million to build, repair, or alter a school building that will be financed by a lease or bonds, it must hold a public hearing at with at which explanations of the potential value of the project to the school corporation and community are given. Similarly, pursuant to Indiana code 6 dash 1.12 dash 3.1, a school corporation must hold 2 public hearings and adopt a resolution to preliminarily determine to issue bonds or enter a lease for a project, which has a total project cost in excess of a non controlled project."

The board heard a presentation from administration staff about the project scope, which the administration described as two principal elements: bus purchases for replacement and operations, and a set of prioritized repair and improvement projects identified in a facilities assessment tied to the corporation's five-school model. The administration provided examples of items under consideration at three elementary schools: Mount Carmel, Laurel and Brookfield. Cited needs include water softeners; temperature controls and ducting related to air-conditioning; electrical outlets and obsolete electrical panels; kitchen equipment (coolers, freezers, dish machines, sinks and ovens); site drainage and sidewalk repair; roofing, gutters and downspouts; playground and window repair; building intercom systems; and, at Mount Carmel, attention to a wastewater treatment plant.

Matt Shoemaker, an underwriter with Stifel, Nicholas and Company Inc., described the financing parameters in the preliminary bond resolution and the corporation's tax-rate objective. "The total tax rate has been right at a dollar," Shoemaker said, and he repeated the corporation's goal to remain tax-rate neutral while addressing facilities needs. Shoemaker said the board was considering a "maximum par amount of the bonds" listed at $4,200,000 and called that figure a "not to exceed number." He outlined conservative financing parameters in the resolution: an estimated cost of issuance of $150,000, a maximum interest rate set at 6 percent, and a maximum bond term of five years. Using those conservative parameters, Shoemaker said the illustrative maximum interest cost would be $618,625, while noting he expected lower interest costs and the possibility of repaying the bonds in one year.

Shoemaker also presented several fiscal metrics included in the materials: a maximum annual payment listed at $4,500,000, a school-corporation maximum annual payment shown as 0.57 percent of net assessed value, and direct and overlapping debt at 0.83 percent of net assessed value. He told the board the bonds could be structured to "maintain the total tax rate" at $1.00 between 2025 and 2026.

The board opened a public hearing; no members of the public signed in to speak. The board then considered and voted on three resolutions from the meeting packet: the preliminary determination resolution (Exhibit A), the preliminary bond resolution (Exhibit B) and the reimbursement resolution (Exhibit C). Kim Simonson moved to adopt the preliminary determination resolution; Katie Holman seconded. The board approved the resolution, 6-0. Jessica Brennan moved to adopt the preliminary bond resolution; Holman seconded. The board approved the bond resolution, 6-0. Brennan moved to adopt the reimbursement resolution; Holman seconded. The board approved the reimbursement resolution, 6-0.

The reimbursement resolution, the board was told, permits the corporation to reimburse itself from bond proceeds for cash it might spend on the project prior to bond closing and is required by federal tax law to preserve the corporation's ability to reimburse prior expenditures from bond proceeds.

Board members present for the votes were Kevin Kaiser, Jessica Brennan, Greg Burris, Beth Foster, Katie Holman and Kim Simonson; Brandy Wilson was absent. The board chair and presenters said this is an early required step in the legal process; staff indicated they will return later to request permission to accept bids for specific projects after they complete triage of the assessment list and better match estimated costs to available bond proceeds.

The meeting adjourned after the three unanimous votes. The board’s actions authorize the corporation to proceed to next steps in the bond issuance process but do not obligate the corporation to issue bonds at the maximum amount or to execute specific projects until bids and further approvals are presented to the board.