Siloam Springs School District weighs second‑lien bond to fund Day Spring Elementary renovation

Siloam Springs School District held a work session to review financing options for renovating Day Spring Elementary, with staff and the district’s municipal adviser outlining how a second‑lien bond could be used to pay for an estimated $15–18 million all‑in project.

At the meeting Scott, the district’s municipal adviser, told the board the district’s taxable assessed value for the 2026–27 year is about $631 million — meaning one mill generates roughly $631,000 — and that existing debt service is about $3.278 million annually while expected debt‑service revenue is approximately $11.7 million. “You have $3.58 in revenue coming in for every dollar that you owe,” Scott said, describing the district’s capacity to pledge debt service for an additional bond if the board chooses to do so.

Why it matters: board members and staff said they want to preserve flexibility while avoiding overcommitment. Administrators reported enrollment is expected to drop by about 267 students (roughly 6%) for the 2026–27 funding year, which reduces state foundation aid; at the same time rising assessment values make the district statistically “wealthier,” reducing the state’s share of any facilities funding and pushing a larger share of costs to local sources.

Project cost and major drivers: administrators and the municipal adviser described the $15–18 million estimate as an all‑in figure that includes architectural fees, furniture and fixtures, and compliance costs. Scott warned that state and code changes require storm shelters built to the International Building Code for new or renovated school facilities, adding a large cost component; he said the shelter requirement can add roughly $200 per square foot. Shane, a district administrator, told the board the team and contractor estimates place the total in the mid‑teens to high‑teens million dollar range.

Application timing and process: the municipal adviser explained the state review cycle — the state board considers financial submissions on odd‑numbered months and paperwork must be filed in even months — and that to appear on a September state agenda the district would need to submit application materials by the first weekend in August. Scott noted the financial‑application process requires one legal newspaper notice and a 14‑day county comment period; comments would be handled at the state board (typically on the consent agenda).

Borrowing decisions and risk: Scott outlined options (a second‑lien bond or shorter non‑bonded installment financing) and cautioned about two practical risks: (1) bids or guaranteed maximum prices (GMPs) can come in higher than the authorized borrowing, forcing value engineering or a later request for additional funds; and (2) the district may owe preconstruction fees to architects/contractors if the board cancels the project after design work (an example precon fee of about $40,000 was cited). He said it is common practice to ask for a modest padding on the maximum amount requested in the application because the district cannot increase the authorized maximum later without restarting the application process.

Board stance and next steps: board members signaled they prefer stewardship and transparency, favor modest padding rather than large cushion amounts, and want continued review of Guaranteed Maximum Price (GMP) estimates and comparable bids from nearby projects. Staff noted potential one‑time revenue streams — including a pending appraisal/sale of district property on Kinwood and state facility funding applications that could be reimbursed later — but emphasized that many of those sources require upfront cash. No formal motion or vote to seek the second‑lien bond was recorded during the work session; staff said they will return with refined cost numbers, bids/comps, and a proposed maximum if the board wants to move the application forward.

Quotable: Scott said, “You could really go out and borrow 70 to $80 million legally because you have enough money to make the debt payment,” and immediately cautioned that just because statute and revenue formulas allow borrowing that large an amount, “we're not encouraging you to do that.”

What’s next: staff and the board will continue negotiation of project scope, firm up preconstruction costs and GMP timing with the contractor and architect, and decide whether to place a maximum bond amount on the state application at an upcoming regular meeting. If the board authorizes a filing, the district will publish the required notice and submit the paperwork to the Arkansas Department of Education/state board on the state’s scheduling cycle.