The Fayette school district’s Board of Education last week gave unanimous approval to pursue a bond issue for capital improvements and passed the ballot language that will appear before voters in the April 4, 2023, municipal and school board election. If approved, a new $3.4 million bond will replace an expiring bond, leaving the debt service tax levy unchanged at $0.7762.

The issuance of a new bond now would allow the district to maintain its debt service levy at its current level. The district’s property tax rate is currently $4.9962 per $100 of assessed valuation. Of that, $0.7762 goes to pay the district’s debt. Should the district do nothing, the debt service fund could be capped, and the debt service portion of the property tax rate could drop slightly.

The district is currently working with Veregy, an engineering and construction company, to upgrade its HVAC equipment. Now that the board has voted to put the bond issue on the upcoming ballot, members of the district and Veregy will begin work to create estimates on specific projects that the bond would finance, such as replacing the roof over the high school gymnasium.

“Now that [the bond issue will be on the ballot], we can start going over the scope of work with them,” said Fayette Superintendent Brent Doolin following the board’s approval.

However, any cost estimates made now could increase by the time on which the measure is voted in April.

“The roof, HVAC, and outside walls of the middle school and ag building are in desperate need of repair, so I am praying the community will vote yes to allow us to address these issues and more,” Doolin wrote in an email to the Fayette Advertiser on Thursday. 

Board members in October were presented with two funding scenarios by Matt Deleo of Century Financial Systems, the company that oversees the district’s bonds. One proposal was to sell general obligation bonds in the amount of $2.6 million. The other would sell $3.4 million worth of bonds, both with estimated coupon rates of four percent for the first year and five percent for the remaining term.

The district could have conservatively borrowed up to $3.5 million, based on Mr. Deleo’s presentation.

The district currently has two outstanding bonds, one from 2018 and the other, a 2012 bond that was refinanced  in 2021. Voters overwhelmingly passed the district’s most recent bond issue in 2018 with around 77% approval. The no-tax-increase bond issue raised $1 million to pay off leases and make capital improvements at the middle school and ag buildings, among others. The district is scheduled to pay off the 2018 bond in 2032. The bond that was refinanced last year will be paid off in 2033.

The school district’s debt payments for those bonds total around $350,000 a year, with annual income from property taxes is around $518,000. Income from property taxes is expected to increase as property values within the district go up year over year. If approved, the new $3.4 million bond issue would increase yearly payments by nearly $140,000 for the first year, and around $167,000 through 2031. Starting in 2032, payments would increase sharply, capping out at $525,000 in 2041.

With the sale of $3.4 million worth of bonds, the district would expect to pay a total of $4,492,500 over the life of the loan.

The district expects the $3.4 million to pay for the capital improvements that are outlined in its pitch to voters. The ballot language also includes the phrase, “without limitation,” so that any leftover funds may be used for additional projects not specifically listed.

The official ballot language that was approved by the board is as follows: 

“Shall the Board of Education of the Fayette R-III School District, Howard County, Missouri, without an expected increase in the current debt service property tax levy, borrow money in the amount of Three Million Four Hundred Thousand Dollars ($3,400,000) and issue general obligation bonds to pay costs of acquiring, constructing, equipping, furnishing, and improving school facilities to include, without limitation, new roofs for the high school and ag buildings, air quality improvements through heating and air conditioning upgrades at the high school, safety and security improvements through exterior door and window replacements, exterior brick wall repairs, and asbestos abatement, as needed at the middle school and ag buildings?  If this proposition is approved the adjusted debt service levy of the District is estimated to remain unchanged at $0.7762 per one hundred dollars of assessed valuation of real and personal property.”

To pass, the measure will require a four-sevenths super-majority (57.14%) of yes votes.