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Kuna considering a record $300 million bond issue

Kuna School District
Posted at 12:12 PM, Aug 10, 2022

This article was originally published by Devin Bodkin in Idaho Education News.

The Kuna School District is mulling a state record $300 million bond issue for new facilities as part of a long-range growth plan.

If approved for the ballot by the board, it would be the largest proposed general obligation bond in Idaho history that EdNews could identify. The Idaho Falls district will float a $250 million bond issue on Nov. 8 — the largest to be put on a ballot by an Idaho school board to date. The Boise School District passed a $172.5 million bond issue in 2017.

Eric Heringer, Managing Director of Public Finance for Piper Sandler, on Tuesday walked Kuna trustees through options for asking local taxpayers to approve a measure as early as this school year. All three options include a $300 million price tag to be borrowed from in stages over the next 10 years. How the district chooses to structure the debt tied to the bonds could vary, Heringer said — and impact how property owners repay the debt over the next three decades.

  • Scenario 1 includes breaking up the measure’s annual debt to $10.3 million over the first six years, then allowing it to grow to $16.5 million in 2029 and to $22.9 million in 2032. This plan would allow the district’s current bond levy rate of $219 per $100,000 of taxable property to fall to $197, but it’s the most “unthoughtful” approach to projected growth in the district, Heringer added. The plan also leaves taxpayers more vulnerable to a bigger levy-rate hikes in 2029 and 2032, when the debt stacks up.
  • Scenario 2 includes setting the annual debt to $15.8 million until the measures are paid off in 2051. This scenario includes a higher chance of initial “sticker shock” from voters and an initial bond levy rate jump to $302 per $100,000 of taxable value. Still, Scenario 2 better anticipates future growth and gives the district more planning power, Heringer said.
  • Scenario 3 also puts more planning power in the district’s hands, but softens the risk of sticker shock by setting the annal debt to $13.5 million for the first six years, then letting it grow to $16.75 million the next four years. This option would bring the bond levy rate to $258 per $100,000 of taxable value, with the number edging slightly upward over the next 10 years.

The district’s financial adviser, Micheal Keith, walked trustees through factors impacting the district’s capacity to run a measure, including rapid population growth over the last two years. As Kuna has grown, so has its capacity to absorb a bigger bond issue aimed at building new facilities. Growth has helped the district’s taxable value skyrocket by about 42% in recent years, to $3.5 billion. Keith projected the number to increase to $5.2 billion next year, bringing Kuna’s projected debt capacity from nearly $198 million to about $312 million.

But the district faces headwinds on top of possible sticker shock from voters, who are already facing record inflation and rising property assessments across the state. A season of rising interest rates and skyrocketing construction costs in recent years further complicate the picture.

Heringer told trustees that he built rising interest rates into his projections Tuesday.

Trustees offered little discussion about the measure and its intended use, but superintendent Wendy Johnson reiterated that plans were still in the early phase.

“We’re not making decisions — we’re just rolling around in it,” said Johnson, adding that the district should find ways to gather input from the community in the coming months.

Go here for Tuesday’s meeting.