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Board authorizes consideration of up to $19M bond resolution; counsel reviews Educational Facilities Corporation
Summary
Trustees approved consideration of a bond resolution authorizing up to $19 million and heard a presentation from bond counsel explaining the district's Educational Facilities Corporation, its financing history and that outstanding EFC bonds mature in 2030.
The Lexington School District 2 Board of Trustees on June 18 approved consideration of a bond resolution authorizing issuance not to exceed $19 million and heard a detailed explanation of the district's Educational Facilities Corporation (EFC) from bond counsel Ray Jones of Parker Poe.
Jones told the board the EFC is a nonprofit 501(c)(3) corporation created to finance educational facilities by issuing installment purchase revenue bonds that do not count against the school district's statutory 8% debt limit. He noted the district's original EFC financing dated to 2006 and a 2015 refinancing; the remaining 2015B bonds mature on Dec. 1, 2030, at which point the EFC's financing purpose will largely conclude.
"The Educational Facilities Corporation is a South Carolina nonprofit corporation that was created by this board of trustees... Its funding is dependent on payments from the district," Jones said. He explained the EFC structure's mechanics: lease the land or facilities to the corporation, the corporation issues bonds, bond proceeds finance construction or renovation, and the district makes installment payments to the EFC until bonds are retired.
Jones said about $2 million of the proposed authorization would go toward installment purchase revenue bond payments and the balance toward capital projects. Trustees asked clarifying questions about how EFC financing differs from referendum or 8% bonds and whether the EFC remains useful given recent state-law limits on new EFC deals.
The board approved consideration of the bond resolution (motion carried) and heard that the EFC currently has four directors with staggered terms; counsel said the district can let the corporation lie dormant or dissolve it after the outstanding bonds are paid off in 2030.
What it means
- The board cleared the path to proceed with an authorization to finance up to $19 million for bond-related purposes; further action will be required to issue bonds or to allocate the proceeds. - Counsel advised trustees that EFC-style deals are historically a third financing option that do not count against the district's 8% statutory debt limit but that legislative changes have limited new EFC activity.
Next steps
Administration and counsel will proceed as appropriate to finalize documentation if the district chooses to issue bonds; trustees may consider additional action on EFC governance in 2027 when director terms expire.
