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December 13, 2022 Board Work Session
New Middle School Financing
Meeting Date(s)
Consent Type

The School Board has previously approved several actions regarding the development of a new middle school on the site adjacent to Viera High School. The project has been under design since April and a construction management firm was selected in June. The team has been working through the design and preconstruction processes to prepare for construction starting in January 2023 in order to open the middle school in August 2024. The construction project is estimated to cost approximately $52-55 million and is funded primarily through educational impact fees. Currently, approximately $27 million is available, with an additional $4 million expected in March/April 2023 and quarterly until the project is fully funded.

The cash flow is available to fund the early works contract for material and equipment procurement and site work, but is not available to fully fund the project. At the time the Guaranteed Maximum Price is submitted for consideration in February/March 2023, it is estimated that $25-$30 million will be needed to fully fund the contract. The School Board previously discussed (March 22, 2022 and September 8, 2022 workshops) the need for short term financing to allow the construction to start in January 2023. The cost of issuance (fees to the Financial Advisor, Bond Counsel, Trustee, Trustee's Counsel and bank charges - approximately $100,000) is included in the total project cost estimate and can be funded through educational facilities impact fees. 

At the Board's direction, the District issued an Invitation to Negotiate (ITN #23-322-N-KR) for Certificates of Participation for New Middle School Construction.  Seven financial institutions responded to the ITN with a wide variety of financing terms. The Evaluation Committee reviewed and ranked the proposals along with the District's Financial Advisor, Ford & Associates. At the conclusion of the process, the Evaluation Committee recommended awarding the contract to PNC Bank, National Association based on a four year (through March 2027) variable rate, non-revolving, draw down line of credit that is payable in full at any time. The interest rate is 79% of the one-month Bloomberg Short-Term Bank Yield Index (“1-month BSBY”) plus 51 basis points. If the loan closed on November 29, the interest rate would be 3.64%.  The advantage of this method of financing is that the District can use the line of credit to contract for the full amount, but borrow only the amount of funding needed to support the construction draws. This is most advantageous to the District as impact fee revenue will continue to accrue through the construction of the project which will substantially reduce the amount of actual borrowing. There is a nominal charge (0.10%-0.12%) on the amount of unused borrowing capacity. The line of credit can be downsized once after closing. The possible downsizing is planned to occur upon receipt of the final Guaranteed Maximum Price from the construction manager.

Based on the recommendation of the Evaluation Committee and with assistance from the District's financial advisor, the District negotiated the final terms with PNC and the District's Bond Counsel has prepared the financing instruments for the Board's consideration.  The Resolution and its Exhibits consolidate all of the actions required by the School Board to secure the short term financing for the new middle school project. 

In addition to the School Board's consideration of the Resolution, the Brevard County School Board Leasing Corporation must also approve a similar Resolution authorizing similar actions relating to financing the new middle school. The Leasing Corporation is authorized by its Articles of Incorporation and Bylaws to enter into leases and lease-purchase agreements to facilitate the financing of construction and equipping of educational facilities on behalf of the School Board of Brevard County. The Brevard County School Board Leasing Corporation will meet immediately after the School Board adopts the authorizing Resolution. 




Authority for Action
F.S. 1001.42
Involves Expenditure of Funds Directly in the Classroom
Source of Funding

Agenda Item will not Require the Expenditure of Funds
Financial Impact
FY Amount Budgeted Fund Cost Center Project Function Object Program
Legal Counsel Review
Resolution 2022-01 - Leasing Corporation Middle School Financing.pdf
Resolution 2022-03 - School Board - Middle School Financing.pdf
Agenda Plus