BENTONVILLE -- The School District's recent bond sale brought $7 million more than expected, money that could be spent on capital projects.
The district bid $198 million worth of refunding and construction bonds, the largest bond issue by an Arkansas school district, according to Scott Beardsley of First Security Beardsley, a Little Rock firm working with the district on financial matters.
Bentonville School Board
The board’s next meeting is scheduled for 5:30 p.m. Monday at the Administration Building, 500 Tiger Blvd. The board will be asked to authorize issuing bonds.
Source: Staff report
The bond issue will refinance existing debt from three previous bond issues and provide $16 million for an elementary school.
Wells Fargo Bank, the winning bidder, structured its bid in such a way the district will end up with $23.2 million in its bank account at the end of this month, Beardsley told the School Board at its meeting Monday.
Instead of taking 2 percent of the amount of the bonds as their profit -- about $3.8 million in this case -- Wells Fargo agreed to take $500,000 to make their bid more attractive. Wells Fargo also included a cash premium of $3.7 million for the district, Beardsley said. The unexpected gain amounted to $7 million for the district.
"That's very good news," said Travis Riggs, board president.
It will be up to the board and district administrators to decide whether to spend that money on capital projects or to invest it and reduce the amount of money borrowed in the future, Beardsley said.
The district assumed an interest rate of 4.5 percent when plans began to take shape for the bond issue in fall 2016. Given Wells Fargo's bid, the district's payments will be between $700,000 and $800,000 less per year than projected, Beardsley said.
Five institutions bid on the bonds on March 1. Wells Fargo submitted the lowest interest rate of 3.659 percent, according to district documents.
Raymond James and Associates had the second-best bid of 3.6593 percent. All five bids were submitted less than one minute before the deadline, Beardsley said.
"So we had a lot of interest in the bonds, a lot of great competition," he said.
Matt Burgess, a board member, asked Beardsley how the district ended up with five bids, which is more than typical.
Beardsley said he and Janet Schwanhausser, the district's finance director, did some advance work to promote the issue. They had Moody's Investors Service rate the bond issue to attract bidders who aren't familiar with Arkansas. This was only the fourth time an Arkansas school district borrowed more than $100 million.
"We have to educate the market on our little niche and make it as appealing as possible to (bidders)," Beardsley said. "We put it up way in advance and started calling bidders and saying, 'What do you need to know about the Bentonville School District?'"
The district received voters' approval last year for a 1.9-mill tax increase that will go toward financing four new schools, including the 12th and 13th elementary schools, a fifth middle school and a fourth junior high school.
The 12th elementary is the first of those schools being built. Site work has begun along Haxton Road in Rogers for construction. A guaranteed maximum price for construction of the school will be brought to the board next month. The school is scheduled to open in August 2019.
NW News on 03/10/2018