CASD to Prepare for $18.65M Bond Issue for High School, Elementary Projects
CLEARFIELD – The Clearfield school board authorized its administration to prepare to issue general obligation bonds, Series of 2013, in the amount of $18,650,000 at Monday night’s meeting. This funding will be put toward but not limited to the current capital improvements at the Clearfield Area High School, as well as that proposed at the Clearfield Elementary School.
The board has already initiated expanding and renovating the high school campus into grades seven through twelve. It approved the aforementioned grade configuration in June of 2011. One year later, it approved the bids for the $36 million high school project. The high school project started this summer and is expected to be completed in time for the 2014-15 school year.
The board is considering the consolidation of the Clearfield Area Middle School and the Centre and Bradford Township Elementary Schools into one building. It’s also considering the conversion of the CES into a kindergarten through sixth grade campus. The board is limiting the maximum CES total project costs to $10,669,360 and its new construction only costs to $8,008,000, according to previous GantDaily.com reports.
At Monday night’s school board meeting, Gregg McLanahan, senior managing consultant at Public Financial Management Inc. in Harrisburg, updated the board on interest rates and the bond market during his presentation. He said their numbers obtained for the upcoming 2013 bond issue were “very conservative,” meaning interest rates are showing considerably higher than what PFM Inc. anticipates the day of the sale.
“The reason we do that is because the sale isn’t scheduled until February,” he said. “We don’t want to mismanage your expectations. A lot of things can happen between now and February.”
McLanahan said the “fiscal cliff” will factor into Clearfield schools’ bond sale. Oddly enough he said if President Barak Obama “gets his way” and the top 2 percent start paying higher taxes, that’s good for municipal bonds. He said these bonds are free of state and federal income taxes, and so the higher the tax rate, the higher the return to the investor. He said if tax rates go down, the equivalent needed goes up.
“The best thing that could happen is for Obama to get his way,” he said. “I tell you that because as you watch it unravel in Washington, it’ll be interesting to see who does prevail. Again, it does have some effect on the Clearfield Area School District’s bond issues.”
According to McLanahan, there has been a “steady downturn” in the bond market in terms of interest rates since 2011. He said right now, interests rates are the lowest that they’ve observed since the Eisenhower administration. He said it’s partly because of the European debt crisis, which has caused interest rates to go down.
He said PFM Inc. anticipates conducting the district’s bond sale in late February and settling in late March, so that they’ll have sufficient funds to pay the contracts to the contractors. He said this will finish the financing for the high school renovation and expansion project and start the financing for that proposed at the CES.
If there would be any indecision on the proposed CES project, McLanahan said the district could pull the bond sale off the market in the days leading up to the sale. He said the district will still sell some of the bonds, as it’ll be finishing the high school project. He said they wouldn’t incur any fees by decreasing the size of its bond issue.
He said PFM has scheduled the bond sale for Feb. 25, 2013 and the settlement of the 2013 bond series on March 25, 2013.
McLanahan said the district has already secured a Series of 2011 bond issue in the amount of $9,820,000 for the high school and district administrative offices projects and a Series of 2012 bond issue in the amount of $9,995,000 for the high school project.
He said the Series of 2013 bond issue will be in the amount of $18,650,000 for the high school and CES projects. He said the district will need to secure a Series of 2014 bond issue in the amount of $8,150,000 to complete the CES expansion and renovation project.