Brodie Killian, senior managing underwriter for the Royal Oak Schools 2020 school building and site bonds, of Stifel, Nicolaus & Co., discusses the live bond sale with students at the Royal Oak Schools administration building Jan. 28.

Brodie Killian, senior managing underwriter for the Royal Oak Schools 2020 school building and site bonds, of Stifel, Nicolaus & Co., discusses the live bond sale with students at the Royal Oak Schools administration building Jan. 28.

Photo by Sarah Wojcik


Royal Oak students participate in live bond sale process

By: Sarah Wojcik | Royal Oak Review | Published February 5, 2020

 Royal Oak Schools Superintendent Mary Beth Fitzpatrick discusses the purpose of the bond program at the Royal Oak Schools administration building Jan. 28.

Royal Oak Schools Superintendent Mary Beth Fitzpatrick discusses the purpose of the bond program at the Royal Oak Schools administration building Jan. 28.

Photo by Sarah Wojcik

Advertisement

ROYAL OAK — On Jan. 28, Royal Oak High School and Churchill Community Education Center students got the opportunity to witness live the second and final sale of bonds at the Royal Oak Schools administration building.

Voters approved a five-year, $59.9 million bond project that will ultimately touch all schools in the district 72.26% to 27.74% Nov. 7, 2017.

The district sold the first $26.9 million in bonds in February 2018. The bond does not increase the amount of the district’s current millage.

“One of the things we felt was important is this bond sale process is often done without engaging the students,” said Brodie Killian, senior managing underwriter for the Royal Oak Schools 2020 school building and site bonds, of Stifel, Nicolaus & Co. “It’s a public sale and all of the documents are released publicly, so we just wanted the opportunity to bring it full circle to the students, who ultimately benefit from these bond-funded projects.”

Students watched the order period tracked live as institutional and retail investors bought orders, and they heard from representatives from organizations instrumental in the bond process. They also witnessed a live view of the market from the trading desk in St. Louis, courtesy of Stifel’s Jim Pratl.

Owner’s representative Lecole Planners, construction manager McCarthy & Smith Inc., and architect TMP Architecture Inc. round out the engineering and construction team. Financial consultant PFM Financial Advisors and bond counsel Miller, Canfield, Paddock and Stone make up the bond finance team.

Before the bond proposal went to the ballot, Kathy Abela, executive director of finance and operations for Royal Oak Schools, said officials conducted a two-year study to identify instructional and major infrastructure needs in the district.

Royal Oak Schools Superintendent Mary Beth Fitzpatrick said the district knew it had some safety and security, technology, facility, and learning environment needs.

Abela explained that the bond issue preserved the district’s general fund and the per-pupil allotment from the state for paying teacher and administration salaries, utilities, and other operational costs. Because the older debt fell off, she said, the bond does not increase taxes.

“When we were first hired, we sat down with the district and came back with some ideas,” said John J. Castellana, of TMP Architecture. “We ultimately reached a consensus by going through a very collaborative process.”

Bill McCarthy, of McCarthy & Smith, said trade contractors bid on the bond projects and his firm manages them.

At Royal Oak High School, work is largely complete on the athletic area, the science area and the music area, and the next major task is to complete the cafeteria expansion. The goal is to complete the food service area by the time students return from spring break, McCarthy said.

“Kitchens take a lot of time. There’s a lot of underground utilities that come up,” he said. “I think we’ve got almost $1 million of food service equipment that’s going in that space. There’s probably about 25 people working in just that little space alone.”

Attorney Amanda Van Dusen, of Miller Canfield, said her firm’s role as bond counsel is to make sure the district understands what it’s doing, understands risks, manages the risks and achieves its goals.

“We prepare board resolutions, the contracts with the architect and construction manager, the ballot used for the election, and we will prepare a host of certificates and opinions,” she said. “We have rules that say that you have to be able to expect to spend at least 85% of the proceeds within three years after you deliver bonds. That’s one reason that we’re doing two series here.”

A stipulation of bonds, she added, is that they can only be used for capital improvements, not salaries, operating costs, maintenance, repairs or software upgrades.

Prior to the actual sale, Killian said, his firm advertised and marketed the bonds to investors. From 9:30 to 11:30 a.m. Jan. 28, Stifel’s trading desk in St. Louis priced the orders, and underwriters and salesforce across the country participated in the sale.

Killian said the process was successful. He said interest rates are at historic lows, and Royal Oak Schools has a strong credit rating of AA2 — the highest is AAA.

“We are just thrilled to have the opportunity to present to the students, and it’s exciting to allow students to see the process live,” Killian said.

Alani Bell, 17, and Amber Till-Norman, 19, both of the Churchill Community Education Center, said they both plan to go into interior design and home renovations. Per Castellana’s open invitation, both teens plan to shadow a young professional at TMP Architecture.

“I thought it was really interesting,” Bell said. “There’s so many different people going into one big thing.”

Churchill Community Education Center Principal Melissa Hutchinson said she enjoyed listening to all of the speakers.

“I’m just happy (students) had an opportunity to see a lot of people from different employment backgrounds, to see what they do and hear what their work is like and the things they studied and where they went to school,” she said.

For more information about specific bond projects, visit www.royaloakschools.org/district/about-us/bond-information or call Kathy Abela at (248) 435-8400.

Advertisement