Board hears second-lien financing options for Dayspring facility purchase
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Summary
Consultant Scott Beardsley briefed the Siloam Springs School District board on second-lien borrowing as a way to fund purchase and renovation of the Dayspring facility, outlining scenarios between $15M and $23M and estimated annual debt-service costs without requiring a voter millage increase.
Consultant Scott Beardsley told the Siloam Springs School District Board that Arkansas law allows many school districts to borrow through a 'second lien' without submitting the proposal to voters, as long as the board believes the district can afford the payments. "Arkansas school districts are allowed to borrow money through what's called a second lien without going to get voter approval," Beardsley said.
Beardsley walked trustees through five sample scenarios for possible district borrowing tied to the Dayspring facility purchase. He estimated that a $15 million borrowing would carry an annual payment "just below $1,489,000 per year," while a $23 million option would produce payments "almost $2,300,000 per year." He cautioned the board these figures are for planning and that the district can apply for a larger amount initially and size the bond issue later.
Why it matters: Using a second lien could let the district fund renovation and repurpose corporate-office space into an elementary school without a millage election. But the board would be committing part of its future general revenue to debt service for the length of the current bond schedule; in Siloam Springs that limits a second lien to roughly a 13-year term tied to remaining bond years.
Board members questioned timing, affordability and risk. Beardsley explained the Department of Education application cycle requires publications and runs on even-numbered months with approvals in odd-numbered months; he also described public-notice and comment steps to be filed with the state. On risk, he gave two cautionary, anecdotal examples of districts that borrowed too aggressively when temporary revenue sources appeared to be permanent.
Next steps: Administration said no action was requested at the meeting. The superintendent and staff will bring certified revenue numbers and a proposed affordability plan back to the board before any formal request to apply for a second lien.