Student athletes will have new fields to play on this spring after the Mexico Board of Education on Tuesday awarded a construction contract to ATG Sports to turf the football field, baseball infield and build a turfed soccer field at the high school's athletic complex.
The board met with ATG representatives Oct. 1, along with two other athletic field construction companies to hone in on a final decision from discussions that started in March.
The board initially decided revitalize the soccer field at the middle school. Discussions then changed to constructing a new field at the high school after public input.
They started the process to seek bids in May, but ultimately settled on seeking a construction firm for the project through a purchasing cooperative that meets statutory requirements for bidding. ATG is part of that cooperative.
The board could seek lease-financing for the project. That financing can be incorporated into future bond language if the board chooses. The board does not have to seek voter approval for lease-financing. If the board were to issue a new series of general obligation bonds, that would need voter approval.
"[We could] lease finance the remainder and paying it off, no more than I think a seven-year, with probably that callable two or three and having it paid off at that time," Superintendent Zach Templeton said.
If the district were to lease-finance the fields for $1 million, that amount could be paid off within three to four years, he said. The fields have a warranty lifespan of about eight years, but can last upward of 12. Turf replacement is around 50% of original installation costs as well.
"Whenever we first started looking at this project, I was anticipating $800,000 on a football field. They bid us about $600,000," Templeton said.
The cost reduction is likely due to work taking place over this fall and winter in preparation for the spring sporting seasons, he said.
"They have crews out there they want to keep hired and busy. If we were doing this project in the summertime, [the price] goes up to $700,000 or $800,000," Templeton said.
So, instead of around $2 million for the fields, it is more likely around $1.6 million. The project will include soil stabilization beneath each field's base and board member Brian Rowe asked if there is a guaranteed cost on that portion of the project. The cost is based on per square yard if stabilization is needed, Templeton said. Costs are between $6 and $6.50 per square yard. ATG did guarantee it would provide the district with a not to exceed number at the Oct. 1 meeting.
"What they're doing is they're going to calculate the total square yardage of the project anticipating that they might not have to do the whole thing, so they're going to give you that kind of number," Templeton said, from a question asked by board member Nicole Nelson.
The field project has become something of a children's puzzle board President Dustin Pascoe said, referencing the original plan of a field at the middle school. They board was trying to figure out where all the pieces fit. Pascoe grew to support the idea of completing the athletic complex at the high school as time went one, he said.
"I think about what it means for our athletic programs. I think about what athletic programs mean for a district. I think about where our reserves are, in my opinion as I've expressed before are too high," he said. "We're not a savings institution. We are able to to spend this money, which is something economically positive for the community and it will not prevent us from engaging in our other chief priorities."
The fields will keep the district competitive with its neighbors while also not damaging the district's financial standing, he said.
The motion to award the project to ATG passed with six votes. Board member Nathan Birt was absent.
The district's financial future
The school board, due to the district's financial standing, could choose to issue another series of bonds through a ballot measure in April. There would be no tax levy increase associated with the bond issuance and would allow the district to spend around $12 million on capital projects. This all comes from an assessment conducted by L.J. Hart and Co. of St. Louis.
This means the district could issue bonds to pay for the field project or envelop repayment of a lease-financing on the fields into the bonds if the ballot language is written as such.
Because there is such a small turnaround time between now and the April 7 election, Courtney Wegman, L.J. Hart vice president, also presented what the district could do if it were to redeem bonds in 2021 or 2022, rather than next year.
"The filing deadline for the April election is Jan. 28. So, at that point you would have to have ballot language, proposition name selected, finalized and the documentation filed with the county clerk," she said.
Because the district is in such a good financial shape with the debt service balances growing faster than debt payments, the district is in a position to put a no tax-increase bond issue on the ballot. The district is limited to a bonding capacity of 15% of assessed valuation. If the board doesn't seek $12 million in bonds for April 2020, it could seek $15 million in bonds in 2021 or $18 million in 2022.
Wegman provided a preliminary financial analysis and summaries for bond ballot issues or lease-financing options.
If the board goes for the 2020 bonds financing would close around June 12 and then interest payments would start in 2021.
"I've delayed the principal until 2029. So remember you have other debt that is paid off in 2037, however there are some big gaps because your balances are growing a lot faster than what you're payments are," Wegman said, adding this would allow for a level debt service.
If the board selected to move forward with issuing bonds in 2020, 57.143% of voters would have to approve it. The same percentage applies if the board went with 2021 or 2022 bonds.
"I would strongly advise against having a bond issue in August or November," Wegman said.
The board, though, could just decide to lease-finance projects, such as the athletic fields, which would not need voter approval. Wegman provided information on $2 million, $2.5 million or $3 million lease-financing loans, with an average interest rate of around 3% paid off in either seven, 10 or 15 years.
The only requirement would be a public hearing for patron input if the board went with lease-financing, rather than bonds. The funding source for repayment would be from the capital projects fund, rather than the debt service, like with bonds.
Annual payments would range in costs from $245,000 to $570,000 depending on the loan repayment timeframe. Principal payments also would start in 2021 if the board was to go with a seven or 10-year repayment schedule. Principal payments would start after five years with the 15-year schedule. The lease-financing also would be callable redeemable, like with bonds after a few years.
"We're looking at a two- to three-year call feature, so that you could refinance it if need be or if you wanted to use bond proceeds, you could pay off the lease with bond proceeds," Wegman said.
Lease-financing takes between four to six weeks for approval because a rating from Standard and Poor's is needed. Bonds already have an S and P rating.
"The higher the rating, typically the lower the interest rate," Wegman said, adding with lease-financing, the money would stay with the trustee bank, UMB, and then the district will submit invoices to the bank to make payments.