Tea Area School Board OKs up to $7.5 million capital outlay certificates and approves bus storage expansion bids

The Tea Area School District 41-5 Board of Education voted to authorize the issuance of limited tax general obligation capital outlay certificates in an aggregate principal amount not to exceed $7,500,000 and approved bids for an expansion of the district operations bus storage during its meeting.

The resolution approved by roll call gives district officials authority to complete the offering documents and proceed to sale. Tom Grumman of Collier Securities, who explained the financing process to the board, described the board action as an authorizing resolution that sets parameters for the sale and allows staff to move to the marketing and pricing phase. "This is a what they call in South Dakota, an authorizing resolution," Grumman said. He added plainly, "I'm not going to be able to get you 0% interest rates," while describing market-driven yields and how coupons and premiums are structured.

The resolution text approved by the board lists allowable uses broadly, including construction and facility improvements, building security, land purchase for a future middle school site, site remodels and the cost of issuing the certificates. Grumman said the district is expected to receive an enhanced rating by pledging state aid under the Health and Educational Facilities Authority program, which would pass the state's AA+ grade to the issue and can lower borrowing costs. He described the typical structure: a 5% coupon with yields by maturity in the roughly mid-3% to low-4% range and a common call period around six to seven years on a 10-year structure, though exact pricing will be set on sale day.

Board members voted by roll call on the resolution. The record shows: Ryan — Aye; K. Johannessen — Aye; Bennett — Yes; Daggett — Aye; Meyer — Yes. The motion carried.

District staff and the board also approved a bid package to expand the operations bus storage adjacent to the new maintenance/shop facility. The board was told only two contractors submitted bids for the addition: Coleman (general/structure) and JJ Electric (electrical). The presented bid for the addition was described as roughly $298,000 plus ancillary costs such as engineering and city permits; staff noted that amounts may change slightly once permitting and final engineering are confirmed.

Board members and staff discussed the capital outlay timetable and restrictions. The district must show intent to spend certificate proceeds within three years and has up to five years to actually expend the money without yield restriction changes, according to the explanation given during the presentation. Staff also noted the district intends to phase projects across multiple summers because the list of facility work is extensive and pricing/availability will affect what can be completed in any single construction season.

Next steps described to the board include finalizing the offering document, obtaining the state aid pledge and rating report, pre-marketing to potential investors, confirming pricing on sale day, and returning to the superintendent and business manager for final signoff of the pricing. The district will return to the board for any specific project awards and for authorization of final contract documents where required.

Votes at meeting: the capital outlay resolution passed on a roll call vote (five ayes). The operation bus storage expansion bids were approved by voice vote with no recorded opposition.