Bond Steering Committee Meeting 5 July 11, 2017 Board Room, Truett Absher Administration Building Welcome & Meeting 4 Recap The fifth meeting of the EMS ISD Bond Steering Committee began at 6 p.m. Tuesday, July 11, 2017, in the Board Room of the Truett Absher Administration Building. Chief Operations Officer Clete Welch welcomed the committee, reviewed key insights from the previous meeting, and provided a brief overview of the evening’s agenda. Estimated Cost Updates Based on scope and quantity modifications requested at a previous meeting, the proposed bond cost was updated and shown. Due to adjustments to aging system projects and standardization and equity projects, the cost allocated is approximately $1 million less than the previous option. Aging Systems Evaluation EMS ISD allocates approximately $500,000-$1 million in its annual budget for capital improvement projects. The identified capital improvement projects needed total $39.2 million. Chief Financial Officer James Schiele explained how the district’s debt is structured. It involves three specific attributes: • The overall principal retirement rate of the entire bond issue; • The interest rate curve and issuing debt to mature at specific times to take advantage of the interest yield curve; and, • The ability to smooth payments and create capacity in future years as growth continues. In no instance has EMS allowed principal to remain outstanding beyond the useful life of an asset. When possible, repayments are accelerated to further reduce the principal. Three years ago, the district began accelerating principal reduction by $12-$15 million per year to create additional bonding capacity. The rate at which projects can be completed with authorized funds depends on tax assessed valuations, construction costs, and interest rates. Mr. Welch gave examples of aging systems and their life cycles. The recommended replacement schedules compared to their ages and timing of proposed phases were presented. Examples of systems with less than a 10-year life cycle are tennis courts, track surfaces, and synthetic turf on competition fields. Systems with longer life cycles include sound systems, gym flooring, and carpet/VCT flooring.
Transcript
Bond Steering Committee Meeting 5 July 11, 2017 Board Room, Truett Absher Administration Building Welcome & Meeting 4 Recap The fifth meeting of the EMS ISD Bond Steering Committee began at 6 p.m. Tuesday, July 11, 2017, in the Board Room of the Truett Absher Administration Building. Chief Operations Officer Clete Welch welcomed the committee, reviewed key insights from the previous meeting, and provided a brief overview of the evening’s agenda. Estimated Cost Updates Based on scope and quantity modifications requested at a previous meeting, the proposed bond cost was updated and shown. Due to adjustments to aging system projects and standardization and equity projects, the cost allocated is approximately $1 million less than the previous option. Aging Systems Evaluation EMS ISD allocates approximately $500,000-$1 million in its annual budget for capital improvement projects. The identified capital improvement projects needed total $39.2 million. Chief Financial Officer James Schiele explained how the district’s debt is structured. It involves three specific attributes:
• The overall principal retirement rate of the entire bond issue; • The interest rate curve and issuing debt to mature at specific times to take
advantage of the interest yield curve; and, • The ability to smooth payments and create capacity in future years as growth
continues. In no instance has EMS allowed principal to remain outstanding beyond the useful life of an asset. When possible, repayments are accelerated to further reduce the principal. Three years ago, the district began accelerating principal reduction by $12-$15 million per year to create additional bonding capacity. The rate at which projects can be completed with authorized funds depends on tax assessed valuations, construction costs, and interest rates. Mr. Welch gave examples of aging systems and their life cycles. The recommended replacement schedules compared to their ages and timing of proposed phases were presented. Examples of systems with less than a 10-year life cycle are tennis courts, track surfaces, and synthetic turf on competition fields. Systems with longer life cycles include sound systems, gym flooring, and carpet/VCT flooring.
Project Phasing Options The committee formed consensus for the projects in the categories of growth, safety & security, failing systems, and standardization and equity at the last meeting. The committee requested to see an alternate phasing option of the aging and failing systems that would allow the replacement of Wayside Middle School to be completed sooner. To make the second option feasible, it would require pushing back completion of other projects with comparable costs. If aging systems are delayed, some may likely become failing systems. Alternate funding, either from the M&O budget or tax maintenance notes, would have to be used to repair or replace these systems. Group Discussion – Consensus on Final Recommendation Committee Chairperson Paul Jacobs reviewed the categories the committee came to consensus on at the last meeting and began the discussion of agreement on the remaining items. The group unanimously agreed all of the projects needed to be addressed, but wanted to hear everyone’s input on the timing of the projects. Some committee members felt the administration was in a better position to make the decision on timing of projects due to finances and capacity, and would support either option. Dr. Chadwell expressed importance of accomplishing tasks presented to community. It’s a matter of “when,” not “if.” The original schedule of projects would be able to address more campuses at a sooner date, and if aging systems became failing systems it would require M&O funds to maintain or replace. The final consensus of the committee was Option 1 with a strong emphasis on Wayside Middle School being a priority as funding allowed. Next Steps The next step in this process is the Bond Steering Committee’s recommendation to the Board of Education on Monday, July 17. The presentation will include background on the committee, the process and information reviewed, and the overview of recommended projects. The Board will then study the recommendation and consider taking action to call a bond election. The deadline to call a November 2017 election is Monday, August 21, 2017. Important dates regarding the election are:
• Voter Education Efforts: August-November • Deadline to Register to Vote: October 7, 2017 • Early Voting: October 23-November 3, 2017 • Election Day: Tuesday, November 7, 2017
Closing The meeting adjourned at 7:32 p.m. The committee will make their recommendation to the Board of Education during the 5 p.m. reports session on Monday, July 17, 2017.
