First bond workshop focuses on financing

By Karen Billing

The San Dieguito Union High School District (SDUHSD) is kicking off the new year with planning for its $449 million bond that will help improve and upgrade the district’s nine campuses and add a 10th campus (a middle school) in Pacific Highlands Ranch (located in Carmel Valley). The first of four bond issuances is set for April.

The board held the first of a series of bond workshops on Jan. 9, this first one focusing on bond financing issues. District Superintendent Ken Noah said the board would not be picking color schemes or making carpet decisions just yet, these workshops will be more detail-oriented “nuts and bolts” information on the immediate next steps.

“We have to do our due diligence in keeping the board actively informed and involved all the way as we move forward,” Noah said. “We have a great responsibility to the public…there’s lots of scrutiny with what districts do with public funds and we need to be very thoughtful, careful and systematic in our planning.”

Eric Dill, associate superintendent of business services, said the first draw would be $160 million this spring.

At the district board’s Feb. 7 meeting, the board plans to pass a resolution authorizing the issuance and terms of sale of the bonds, as well as a bond purchase contract. By Feb. 22, the district expects the County Board of Supervisors to approve its resolution and form of disclosure enabling the pricing call for taxable and tax-exempt bonds to occur in March with the closing and delivery of funds by April 2.

With the bond, the district plans to revive its old planning department, which shrunk from seven to two positions in 2006 after the closing of several district construction projects.

Dill said they are proposing to add two positions in support of the bond program under the newly named facilities construction department. The positions will be presented to the board at its Jan. 17 meeting to provide management for the bond under the newly named facilities construction department.

“It’s critical that we be as clean as we possible can be in this regard,” Noah said, noting that one concern raised by the public about general obligation bonds is that they are used as a way to supplement the general fund. “Our planning effort is anything but that. We want to be clear all along that this is not the issue at all in this district.”

Bond funds can only be spent on voter-approved projects in the measure. While some districts have hired program management companies to handle the work, the San Dieguito high school district has determined that it can do the work in-house for half the cost and save up to $8 million.

Existing personnel moved into bond positions will be funded by the bond program; if their old positions are back filled the new employees will be funded by the General Fund.

There are two positions that will work on both bond and Mello Roos accounting and their funding will be split according to the time spent on each.

The district also plans to purchase new project management software that will help streamline the process of finance and construction documents related to all the projects. The paper costs involved in the construction process can be exhaustive—the district spent $40,000 in paper for Canyon Crest Academy in blueprints and other documents.

“We’re planning to go paperless on all of these projects,” said Russell Thornton, the district’s executive director of operations who will become the senior program manager for the facilities construction department.

The software also creates a searchable audit trail of all activity and decisions, providing visibility. All project progress will be able to be tracked in real time on a website.

‘It’s a really good accountability system, but really it’s the efficiency it will bring [that is key],” Dill said.

A construction schedule sees work beginning in 2013 on the track and field at Canyon Crest and San Dieguito Academy; technology upgrades at La Costa Canyon; HVAC (heating, ventilation and air conditioning) in selected rooms at Diegueno Middle, La Costa and Oakcrest Middle; stadium lights, fire road improvements and a new water main at Torrey Pines; and site acquisition for the future Pacific Highlands Ranch Middle School.

“It was important for us to get out and do some projects,” Thornton said.

As the bulk of the projects will take a lot of time to design and get approvals, Thornton said they looked for projects that were the most “shovel ready.”

2015 is the year targeted for the first phase of the Pacific Highlands Ranch Middle School (a 500-seat classroom building) to begin, as well as the beginning of a performing arts center for Torrey Pines High School.

Complete construction schedules are available on the district website, with project start times scheduled out to 2020, such as the remodel of the Torrey Pines High School gym.

Dill said they want to remind people that this is a long-range facilities plan; all projects were never meant to be completed by the summer of 2013. Noah said they are already hearing some rumblings of favoritism among the nine school sites but it is just the process of phasing and funding.

“Hopefully by the end, everyone will be happy,” Noah said.

The district is keeping its eye on pending legislation from Assembly member Ben Hueso (D-San Diego) and the county treasurer on school bonds that could impact their overall Proposition AA bond monies program.

Hueso’s proposal does not just impact capital appreciation bonds that received a lot of attention last year, but all bond issuances. He’s proposing all school bonds have a limited term of 25 years, requiring all bonds with a term of 10 years or more to be callable; to impose a cap on debt service ratio of 4:1; and involve more oversight from the county level.

Dill said that, should the bill pass, there could be a lot of constraints that would affect the district’s ability to pull off its bond program. It could potentially extend the district’s bond program by five years, causing projects to be delayed or not pursued at all due to concerns about cost escalation.

Additionally, the California Association of County Treasurers and Tax Collectors has a similar bill to Hueso’s, with many of the same limitations but also mandates that a bond debt cannot increase by more than 5 percent per year. This proposal would extend the district’s bond program by 10 years and would likely cause the bond program to not be fulfilled as originally conceived because of the additional cost escalation. The district would be forced to reprioritize its needs, Dill said.

“We’re watching these bills very carefully,” Dill said, noting that nothing has even hit the floor yet.