The first signs of construction of new athletic fields at the city's two public high schools were apparent Friday, even as Lawrence school district administrators are still determining funding for the projects.
It's not unusual for construction projects to move forward without accounting for every dollar, said David Arteberry, of the district's financial adviser, George K. Baum & Co. in Kansas City, Mo.
"That's typically the way things proceed," he said. "Any government entity has to first authorize the project, and then secure funding. You can't secure funding unless the governing body has taken the necessary steps to actually authorize the project."
On Monday, the school board unanimously approved the construction of athletic fields at Lawrence High School, Free State High School and Lawrence Virtual School, formerly Centennial School. The board authorized George K. Baum to negotiate a lease-purchase deal, which will allow the district to borrow money from either a financial institution or private investors, an option called certificates of participation, to complete the project.
Last week, George K. Baum distributed requests for proposals to about 10 financial institutions in Lawrence and across the country.
The projects have started to move forward, because the board authorized the district to use $3.8 million left over from a 2005 bond earmarked for secondary school improvements, to go toward paying for the construction.
That gives the district a cushion to start the work in the unlikely event it cannot secure financing elsewhere, Arteberry said.
In total, the board authorized the district to spend as much as $12.1 million on the facilities. That includes leasing for $8 million and any interest that may be applied to those funds. As much as $1.2 million was allotted for interest, though Arteberry does not expect it to be that much, even in a volatile market.
"In reality, if interest rates maintain at their current level, and (the district) makes their payments, the net figures will at $10.4 million," he said. The district would pay that off over 10 years, using money in its capital outlay fund, which is supplemented by tax dollars from the mill levy.
"Until we go out into the market and determine interest rates and determine how that will look, we don't have a final resolution," said Kathy Johnson, the district's finance officer.
Arteberry said the preferred lending option is a direct lease or a loan through a financial institution. But if that funding can't be secured, certificates of participation would be on the table.
"The resolution allows for both to be looked at, and whichever one is most beneficial for the district, that would be the recommendation for the board," Johnson said.
Arteberry said his company would receive responses from lenders today.
"If we feel that we've gotten some good proposals with some good, competitive interest rates, then we'll select one and proceed to do the lease transaction," he said.
That requires presenting to the board again, which will likely happen by the Nov. 10 school board meeting.
Arteberry said the district's credit rating is good, and there should be no issues in finding a lending partner.