FPS completes first sale of $98 million 2020 bond

By: Jonathan Shead | Farmington Press | Published August 12, 2020

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In late May, the Farmington Public Schools district completed the first of two bond sales under the $98 million bond voters approved March 10. 

The value of the 2020 bond sale equated to about $57.26 million for the district, though the district also received about $10.9 million extra in premiums, providing them a total of $68 million in funds to be used. 

The bond’s debt millage rate was set at 3.2 mills, half of which residents should start to see — 1.6 mills — reflected on their summer 2020 tax statements. 

“(It’s) a very much needed gift from our community. I can’t thank our community enough in terms of what that means to us to allow us to preserve our general fund dollars toward educating the kids,” Superintendent Robert Herrera said. 

According to a press release from the district, the first series of bond funds will be used to remodel district buildings for safety and security improvements; to equip, furnish, re-furnish and remodel school classrooms, auditoriums, roofing and climate control units; to improve and develop sites such as outdoor athletic facilities and playgrounds; to acquire school buses; to acquire technology infrastructure and equipment; and to pay the costs of issuing the bonds. 

“We’ll most likely purchase some buses this upcoming year. That will be part of it. We’ll do some technology, based on the evaluation of programming and what’s going to be needed, and that may even change now with the learning environment and COVID-19 and the impact of that,” Assistant Superintendent of Business Services Jennifer Kaminski said. “The majority of it will be used for those construction related items.” 

Herrera said bond projects are likely to begin in the spring or summer of 2021. Of the $68 million, Herrera said, the district will engage in about $26 million of work for the first year. Another $23 million is slated for projects during the 2021-2022 year. 

As for exactly what projects the district plans to implement during the first year, Herrera couldn’t get specific just yet. 

He said the district is working currently to finalize its professional services team, which includes representatives from Plante Moran, architects from Wakelys Associates Inc., and members from McCarthy & Smith — the district’s construction management partner, so they can take a deeper dive into specifics. 

“During the next couple months, we’ll finally, as we finalize our professional services team, begin to walk the buildings in detail and validate the scope of work in terms of prioritizing what needs to get done first and what’s really part of phase one,” he said. “The first (part) is more of a feasibility study. Now we’re going to do the work, we want to take a little bit deeper look to make sure we understand the nature of the work (and) any contingencies that would be involved.

“We know in a 10-year period that this boiler is going to go out, but if it isn't going to go out for six years, you don’t want to replace it right now,” he added. “The lens of detail (the professional services team) is going to look to validate these projects now is going to be more focused and thoughtful than it was.” 

Herrera anticipates the district will have a detailed plan for how the initial $26 million for phase one will be spent. The additional $40 million of the bond, which the district plans to sell in 2023, will follow the same process. 

“Once we have phase three complete, we’ll certainly know where the last $40 million will go in terms of finishing those projects.” 

With an Aa3 credit rating — a few ratings lower than the highest — Kaminski said that helped in the overall sale of the bond. 

“Our underwriters and financial advisers were very pleased with how everything went, because it was kind of a tumultuous time frame. The market was going up and down, and by doing that negotiated sale they were able to choose a date to go out to market. They could have delayed it if something would have happened negatively prior to going out, but everything went as planned. … They were very pleased with the results, and so are we. We think we did very well in the sale.” 

The bond's true interest rate — the nominal, or average, rate over the lifespan of the 20 year term — is 2.57%. 

Call Staff Writer Jonathan Shead at (586) 498-1093. 

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