Lakeland board approves lease and trust indenture to back roughly $6.8 million in lease bonds

The Lakeland School Board and its affiliated building corporation on Thursday approved a lease agreement and a related trust indenture that allow the district to pursue lease-backed bonds to fund improvements, primarily at Lakeland Intermediate School.

Bond counsel Mr. Long described the financing structure as “doing a 1st mortgage bond with the building corporation,” a mechanism he said is commonly used by Indiana school corporations to finance capital projects. The lease, presented as Exhibit A, would make the building corporation the issuer of the bonds while the school corporation occupies the property and repays the debt over time.

Board discussion reviewed key lease terms: during renovation the lease provides for rental payments of up to $1,000,000 per payment, payable June 30 and Dec. 31 beginning June 30, 2027, and thereafter an annual rental payment not to exceed $2,000,000 plus taxes and assessments; the lease term runs for 22 years and includes an option for the school corporation to purchase the property after a specified lapse of time. The board voted to adopt the lease authorization after a motion was made and seconded; the motion carried with no recorded opposition.

The board also approved a trust indenture that would name Regions Bank as trustee to hold bond proceeds and disburse them on verified construction affidavits. Mr. Long told the board the indenture establishes not-to-exceed parameters for a future sale, “things like a maximum interest rate not to exceed 6%,” and allows counsel and underwriter review and near-final approval of the preliminary official statement before distribution to investors.

Additional bond-related resolutions the board adopted included authorization to assign construction contracts to the building corporation if recommended by construction professionals, a supplement to the master continuing-disclosure undertaking for investor reporting, and informational additional-appropriation resolutions for the county Department of Local Government Finance related to the lease bonds and taxable general-obligation bond referenced separately. Counsel said the package contemplates roughly $6.8 million in new-money lease bond parameters.

The board recorded motions and seconds on each resolution and the chair called the question; each resolution was adopted with no opposition noted. The meeting adjourned the bond hearing portion before resuming the regular board agenda.

What comes next: Counsel and administration will continue to fine-tune offering documents with the underwriter and bond counsel; sale timing will depend on market conditions and the board’s decision to move forward once parameters (and any necessary appraisals or property dispositions) are finalized.