School Board signs off on bond issue

FORT SMITH — The School Board unanimously approved Monday proceeding with issuing $31 million in construction bonds.

In June 2018, the board reviewed a timeline to issue bonds supported by an election that year, said School District Chief Financial Officer Charles Warren.

In May 2018, Fort Smith and Barling residents approved a millage increase to pay for multiple projects in the School District. The increase, which moved the district property tax rate from 36.5 to 42.058, will generate about $120 million. It was the first millage increase in Fort Smith since 1987.

Warren said the timeline included the flexibility to delay the $31 million bond issue as needed, with the district now ready to move forward with it.

“It also is coinciding with some, what we hope to see, favorable rates regarding the current market,” Warren said. “While we’re seeing a lot of lower interest rates on the short-term market based upon what the fed is doing, we’re hoping that will also impact the long-term rates of which our bond issue is relying on.”

An abstract included in the agenda packet states the Federal Reserve cut its benchmark interest rate to 0% on March 15. The district’s financial advisor, Stephens Inc., prepared a schedule of events for the bond issue, with June 9 being the targeted closing date. The district’s goal is to select a closing date providing the lowest available interest rate.

School board member Dalton Person asked Warren about the savings estimated by issuing the bonds in this environment as opposed to the trajectory the district was on one or two months ago. Warren said it’s difficult to tell with this difference in timing because the district is still “projecting out a couple of months.”

“However, when we’re providing an estimate right now, we’re looking at a debt service payment that we’re conservatively working with Stephens to project, and we’re hoping to see an annual savings in debt service of $200,000 every year below our projected millage campaign,” Warren said. “So we’re hoping to be able to achieve that, and if we’re successful, it may even be lower than that.”

Warren also confirmed the School District has the right to decline to accept any of the bids.

Monday’s meeting was held virtually in accordance with social distancing guidelines from the Centers for Disease Control and Prevention pertaining to the ongoing covid-19 pandemic. The public was able to watch the meeting via live stream on the district’s YouTube channel.