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Middletown Area SD to issue $15 million bond this year; final tranche delayed until next year, financial advisers say
Summary
Raymond James advisers told the school board the district will issue $15 million in general obligation bonds in 2025 and hold a smaller "cleanup" issue next year once final project costs are known; no board action was required at the meeting.
Ken Phillips of Raymond James & Associates told the Middletown Area School District board that the district plans a $15,000,000 general obligation bond issue this year and a second, smaller “cleanup” issue next year once final project costs and district cash contributions are known.
"So tonight's just an update. No formal action is required," Phillips said, describing the plan and current market conditions. He said the district has taken three prior bond issues — $10 million in 2022, $10 million in 2023 and $30 million in the fall of 2024 — and had planned for a single roughly $25 million final issue before splitting that final tranche into two draws.
Phillips placed the decision in context: state PlanCon subsidies for school construction have largely paused, increasing the district's local share of construction debt. He cited the district's current annual debt run rate at about $6,700,000 and said that amount is expected to grow as additional projects move forward. "We've basically known that this would be a % local effort from the school district to fund the projects," he said.
Phillips said municipal borrowing rates for tax-exempt issuers remain near their 25-year average and are far lower than current mortgage rates. He told the board the district recently completed a credit-rating call and expected no material change from its current A+ rating. "Mister Franklin, as always, did a wonderful job telling the district's credit story," Phillips said about the district's representative on the call.
Phillips also noted the district previously passed a parameters resolution in 2023 authorizing the financing team to proceed; because that authorization remains in place, no additional board action was required at the meeting. Once the rating is returned next week, the financing team expects to lock interest rates within two to three weeks and settle the issue about a month after that.
The district will use available district cash to reduce the size of the final 2026 cleanup issue, Phillips said, and staff will return with a final recommendation when final project costs are known.
Ending: The presentation was informational; board members had the opportunity to ask questions but took no formal vote on the financing at this meeting.
