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CAB School Board Agrees on KHS Debt Refinancing
September 24, 2008 - The Charles A. Beard School Board voted unanimously last week to proceed with refinancing the debt incurred to build Knightstown High School, a move that could be worth $2 million to the school corporation.
During his presentation at the board’s Sept. 16 meeting, Lonnie Therber, a financial consultant with Therber & Brock in Indianapolis, explained the benefits of “refunding,” or refinancing the 2001 bond issue that paid for KHS’s construction. Not only could refinancing the current 4.6 percent interest rate with one of 3.67 percent result in savings of $107,340, Therber also told the board that if CAB opts for to refinance, the school corporation would get access to $1,262,000 from a sinking fund.
Therber said currently the $1,262,000 belongs to bond bidders as security on the outstanding bonds. Once CAB refinances, however, he said the money would be able to be used for additional construction at KHS.
An additional $737,000, which Therber said could be used at any CAB facility, could be raised through supplemental bonds that would be issued at the time the others are refinanced. Therber said the supplemental bonds would be repaid through CAB’s Debt Service funds and would result in the January 15, 2022, final payment date on KHS bonds being extended two years.
Therber explained that the decision to refinance will actually have to be made by the KHS Building Corporation, the nonelected entity created to authorize the original bond issue. He said the school board’s role would be to make a recommendation to the building corporation that it undertake the refinancing.
Superintendent Gary Storie said he thought the refinancing proposed by Therber was an attractive option worth serious consideration, as it would allow CAB the money needed to do some things to its facilities. Board members agreed and unanimously approved Storie’s recommendation to proceed, signing off on a resolution that directs the KHS Building Corporation to take all needed steps to effectuate the refinancing.
On another bond-related matter, the board also voted unanimously at last week’s meeting to work with Therber’s firm on the issuance of bonds that will be needed to pay an approximately $800,000 debt owed to the special education cooperative run by New Castle Community School Corporation. The NCCSC School Board recently authorized its school corporation to sue CAB for the full amount owed for required payments CAB has failed to make.
In other financial matters, the board passed resolutions adopting CAB’s proposed budget for 2009, as well as its three-year capital projects plan and a 13-year bus replacement plan. A resolution was also passed giving Storie and Business Manager David Bundy permission to lower certain balances on the budget form if needed.
Following up on a matter Storie brought to them in August, the board voted to approve an additional appropriation in CAB’s General Fund for 2008 in the amount of $250,000. Storie explained that CAB has this money, but needs to get permission from the state before it can be spent.
The board briefly discussed the possibility of selling CAB’s current central office at 345 N. Adams St. and building a new one with proceeds from the sale. Board President Kevin Knott said many people in the community had expressed concern to him about the central office property and that he thought it was time for “frank discussion” about it.
Before the central office property could be sold, Knott said CAB’s attorney had advised them the school corporation would need to get two appraisals. He said it would also be necessary to have a title search done on the property.
Board Vice President Steve Dalton noted that utility costs for the central office for the past 12 months had been close to $24,000 and that there are only seven people who work there. He also said someone has already expressed interest in possibly purchasing the building and real estate.
The board directed Storie to have a title search done on the central office. CAB’s legal counsel will also be asked to research whether CAB would be liable for any potential environmental issues involving the property.
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