Editors Note: This article was originally published in the Dec. 20, 2023 issue of the Chronicle Progress. Some information may be outdated.
Move follows voter rejection of previous bond ballot initiative
Millard Board of Education members voted unanimously last week to approve the issuance and sale of not more than $50 million in 36-year-term lease revenue bonds to finance future building projects in the school district.
District officials, acting as a local building authority, held a public hearing Thursday ahead of a vote authorizing the bond offering.
Three members of the public offered comment at the hearing, including two former county commissioners.
Jim Withers, a local dairy farmer and former commissioner, questioned why the district was moving forward on the building spree—the district plans to spend $47.5 million on a major renovation of Millard High School, several new classrooms at Fillmore Elementary and some other minor projects—despite voters rejecting a district effort to issue less expensive general obligation bonds during the Nov. 21 general election.
He also asked why the district couldn’t wait until new growth, particularly from the IPP Renewed power plant project under construction, could be utilized to fund any needed construction.
Board Vice President Jenni Finlinson said the district was concerned that waiting any longer would only make the task more expensive. She said voters rejected a similar effort more than a decade ago that could have furnished Fillmore with a new high school at half the current price. Combined with expected growth, she said, made waiting a less than ideal option for the district.
Withers said taxpayers are footing the bill anyway. And though district officials say property tax rates won’t go up as a result of the new construction, taxes also won’t be going down, the former commissioner said.
“I just get concerned that we keep spending, spending, spending,” he told the school board.
Superintendent David Styler agreed taxpayers are paying for the construction, but that tax rates will remain steady because the district has paid off one older bond and is close to retiring another, funds from which will shift to pay off any new bonds.
“Funding is structured in such a way that there will be no additional impact on you,” he said, adding that the projects would be completed by 2026 when the new power plant would begin to generate new tax revenues for the district as well.
According to bond documents posted ahead of the public hearing, the district owes a little more than $4 million on outstanding older lease revenue bonds.
Daron Smith, another former county commissioner, also commented at the hearing. He lamented that property taxes have been spiraling upward for years, impacting people’s finances, with no real relief expected anytime soon.
“We always pay more,” he said. “So it’s a little bit misleading to people, that statement, you’re not going to have to pay more for this project. But like was mentioned, taxes never go down…it’s hard on people.”
He also called the recent rejection of the district’s general obligation bond effort a “vote of no confidence” by taxpayers.
The district has faced some heat recently over issues involving property taxes and the revenue the district derives from them.
In September, for example, the board of education approved a 50-percent property tax break over the next two decades for a solar energy company’s 300 megawatt project. The district expects to realize some $10 million in proceeds from the tax increment financing scheme, the bulk of it payable within the first several years. District officials previously said they favored the tax breaks— county official roundly rejected participating in the plan—because the funds could be delivered directly to the district’s bottom line unencumbered. Whereas, if the tax break were not given, property taxes generated from the solar development would simply have filtered to the district through the state’s normal education spending channels, where the state decides how the money is spent.
Not all commenters at the public hearing shared the former commissioners’ concerns over taxes.
One woman said she was thankful for the district’s efforts. Though she didn’t provide her name, she said she recently visited Millard High School for a drama competition. She said the school reminded her of a dungeon.
“I know my friends over in Fillmore are super excited about it,” the woman said.
After the public hearing, the board voted unanimously to move forward on issuing the new lease revenue bonds. A request for proposals from underwriters was set to be issued as early as Dec. 15.
But the district may not be quite out of the woods yet concerning public opinion. Part of the process also entails a 30-day contest period, whereby residents can gather signatures from at least 20 percent of the county’s registered voters and, if successful, place the bond sale back on the ballot for voters to decide. That contest period ends Jan. 14, according to a presentation made during a Thursday work session by the district’s bond consultant, Japheth McGee, vice president of Zions Public Finance.
Should the contest period come and go, McGee said district officials could expect to participate in a bond rating presentation before one of the ratings agencies, such as Moody’s.
That could take place around Jan. 24.
McGee said the benefit to issuing general obligation bonds versus lease revenue bonds was that the district could borrow the state’s AAA rating to sell the obligation bonds. But with lease revenue bonds, the district is literally putting up its land and buildings as collateral—and at a lower expected bond rating.
The district’s rating, McGee predicted, would likely fall within an A1 to an AA rating. He suggested the district could improve its rating by insuring the bonds and utilizing a large insurance company’s bond rating to save on interest costs.
“It might offset the cost there, probably not, but that allows us room to borrow extra money for the capitalized interest, which will then allow us to get insurance,” he said.
After obtaining a rating, the district would likely embark on a bond sale by about Feb. 22, with a closing date of March 7.
Styler said the district’s general contractor was planning to break ground on the new high school sometime in March, so the timing was good.
When voters rejected the district’s general obligation bond effort in November, the result was that the district will now likely pay close to $4.5 million more in financing costs than if voters had approved the plan.
