Jeffco goes to market with bond sale Wednesday

Phase one offering of $567 million for school facilities


Jefferson County Public Schools is looking to get a good chunk of its voter-approved $567 million bond money as soon as possible, to begin some of the facility work it has promised.

The school district is putting an anticipated $341.4 million in municipal bonds up for sale on Dec. 12.

Assuming enough bonds are sold, the Jefferson County Schools Board of Education will formally approve the bond sale on Dec. 13. The district anticipates all paperwork on the bond to be finalized and the money to be in the district’s coffers by Dec. 20.

Jefferson County seems to be the only school bond to hit the market in December.

According to Jeffco's Chief Financial Officer Kathleen Askelson, district staff had to begin working in September to prepare the “preliminary official statement” needed to offer a bond, just to have the option to sell the bonds as early as December, if the market timing seemed right.

To district staff, hoping to lock in an interest rate of 3.74 percent, the timing does indeed seem right.

“In January there’s around 1.1 billion in Colorado general obligation bonds scheduled to sell in a two-three week period of time,” said Brian Kelso, the senior manager of the district’s underwriting team. He said staff believes getting to market before the January glut would benefit Jeffco.

Also, bond interest rates are currently lower than the 20-year average, and lower than Jeffco’s current average interest rate on its older bonds of 4.06 percent.

“We’re well known in the national marketplace in the capital markets and we have very high grade credit (AA),” Steve Bell, Jeffco school’s chief operating officer said.

Kelso said the uncertain future of the entire state’s PERA funding shortfalls as one of the factors that might have taken a bit of the shine off of Jeffco’s bond offering.

Bell said the district had “lost some opportunities” since the attempted 2016 bond had not passed at the ballot box, thanks largely to construction costs rising 12-14 percent annually. He said Jeffco has done what it could with facility repairs in the last two years.

“We’ve kind of exhausted all the resources we have,” said Bell, “so we’re very appreciative of the voter approval this year.”

According to Bell, the reason that Jeffco is not seeking the entire $567 million at this time is because the district doesn’t have the staff to handle all the projects that would be funded by the full amount. Also, it is difficult to find the workforce to complete such a large number of projects, he said. Federal tax-except bond rules say 85 percent of the collected bond money should be spent within three years of the bond sale.

The district can choose when it wants to seek the remaining bond money approved by voters — roughly $225 million.

One criticism of the bond had been that the district intends to not start paying down the principal value of the bonds until 2027, thereby costing the district more in total interest costs. Bell said the district’s ongoing policy regarding bonds is to try and smooth out debt payments, delaying higher payments until older bonds are paid off, to minimize the tax impact on residents and property owners, while still delivering a good value to the district.

The bond proposal, listed on the November 2018 ballot as 5B, was down by more than 8,000 votes on election night. However, the votes that were counted after Election Day helped tip the scales back in the bond’s favor. The final tally had 5B winning, 54.9 percent to 45.1 percent.

This was the fifth bond proposed for Jeffco schools since 2004, when the last major bond for facility improvements ($323.8 million) was passed. Voters approved a $99 million bond for repairs related to keeping schools warm, safe and dry in 2012. But they rejected a $535 million bond in 2016 and a similar request in 2008.

Reporter Shanna Fortier contributed to this report.


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