The North Little Rock School District will generate almost $30 million over five years by refinancing its bonds, and now the School Board must decide what projects will benefit from the savings.
The School Board on Thursday unanimously approved adopting the resolution to refinance bond issues that would free up $29 million over five years for projects, and lowered the annual debt payment by approximately $1 million a year for 10 years.
Financial adviser Scott Beardsley told the board the school district received seven bids from financial companies on the refinance request, with the lowest bid coming from Wells Fargo Bank at 1.91% interest.
Beardsley said refunding or refinancing a bond issue lowers the annual debt payment if current interest rates are lower than the bond rate. He said the savings are the difference in the old payments compared with the new payments at a lower interest rate.
"The savings are unrestricted and may be spent by the board for operational needs, construction or put into your building account," he said. "They can be rolled over from year to year."
On Jan. 15 the School Board approved refinancing three bond issues in hopes of generating $10 million over 10 years in operational savings and $25 million over the next four years for future facility projects.
"We were eligible to roll these three bond issues together for one refunding," Beardsley said. "We were hoping to get approximately a 2% interest rate on the refunding bond issue. ... Our benchmark was can we beat the 2%, and could we get $25 million for projects as well as lower your debt payment."
Beardsley said since Wells Fargo's bid gave the district a better interest rate than what the district had projected, the savings came in higher than expected.
"What ended up happening was the district was able to generate a little over $29 million over a five-year period for projects as well as lowering your annual debt payments by approximately $1 million a year for the next 10 years starting with the 2021-22 school year," Beardsley said.
The savings will allow the school district to redirect funds to the district instead of paying off debt, Beardsley said.
School Board members met Feb. 8 to discuss prioritizing a facilities project that could take advantage of savings from a bond refinance.
"The potential project list are just things we have discussed in the past," Brian Brown, chief financial officer for the school district, said during a school board workshop. "We have looked into these projects and got estimates on what those things may cost."
Among the projects was a complete renovation of the Ole Main building. The estimated cost to renovate the old high school into an administrative building is $11,418,570.
Ole Main is a three-story building with a full basement and a central five-story tower that is listed on the National Register of Historic Places. The building currently serves as a storage place for the school district's drama department and the JROTC program.
The Ole Main Task Force suggested that the school district turn the building into a administration office.
A slideshow presentation included options for turning Ole Main into the central office for the district while also housing exhibits from the North Little Rock History Commission and using the auditorium as flexible space.
The cafeteria/kitchen area in the old high school could be used by the University of Arkansas-Pulaski Technical College culinary/hospitality program, and the courtyard could be turned into a garden. The first-floor entrance would be home to the North Little Rock History Commission, where history and storytelling exhibits would be on display.
Harold Hatch, the district's maintenance supervisor, estimated the cost of building a brand new administrative building at $10,399,904, which would include the demolition of the old police and court building, construction of a 176-space parking lot, signage and window shades.
"Because of the cost of turning Ole Main into an office complex, we were told that we could possibly build a brand new building at that cost or lower," he said. "This would be placed where the current police and courts building is. It would also give us additional parking for home football games or anything else that we have going on at the high school."
The unofficial project list also includes the potential demolition of the old Poplar Street Middle School and the old Annex Administrative Office building, and renovations to the current middle school.
"The middle school is a very important campus when it comes to constituents of the school district goes," Hatch said.
Hatch also said the middle school auditorium was in need of renovation and the roof needs repair. He said the projected estimate for a new middle school was around $34,021,165.
"Our share of that $15,074,097 and the state would provide $18,947,067," Hatch said.
The School Board hasn't made a decision on any of the projects.