Linn R-2 pursuing lease-purchase options for track improvements

By Neal A. Johnson, UD Editor
Posted 11/1/23

LINN   — Linn R-2 board members, at their October meeting, authorized Superintendent Bob James to proceed with lease-purchase options for track improvements.

James noted that based on …

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Linn R-2 pursuing lease-purchase options for track improvements


LINN  — Linn R-2 board members, at their October meeting, authorized Superintendent Bob James to proceed with lease-purchase options for track improvements.

James noted that based on projections for construction, should Linn include resurfacing the track in the potential upcoming bond effort, it may be another season or two before work could be done.

“That’s a long time considering we needed to do it this year,” said James, who presented a lease-purchase option to repair the substrate and surface of the track, along with an upgrade to the lights and fencing at that time.

The interest rate is 4.182%, and James believes the district’s annual payment would be approximately $60,000.

“There are some pros to doing it,” he added. “If we get it done before winter hits, we could have our track resurfaced before spring gets here, which would be great for our kids.”

One con is that payments are made from the general fund. “It’s like taking on a payment that’s not covered in your debt service levy,” James said. “We can afford to do that, but like anything, we have to consider priorities. We would be earmarking $60,000 per year for the next 10 years, just for track improvements.”

Tracks are commonly resurfaced every 10-12 years, James added.

Linn resurfaced the track for the first time in the 1995-96 school year, and it’s been resurfaced once since then. “We’re stretching the limits of the track surface as it is, and honestly, we should be doing this as a replacement cycle anyway,” said James, noting the estimate for fencing came in lower than expected at about $33,000. “We also desperately need to upgrade our lights.”

At other facilities during the football season, James said it’s like daylight on the track with the lights used by other schools. “It’s noticeably dark on ours,” he added.

Lights cost between $1,600 and $1,700 each, and Linn has 28 lights in need of an upgrade.

All told, James estimates a total cost of about $500,000.

“If we decide to do a lease option, one of the pros is that a half-million dollars would come out of debt service if we include it in the bond, which would free up money to do other things,” said James. “That’s good. We don’t have much of a bonding capacity. That being said, we do have the option, should we choose to pursue that, to pass a referendum in November, essentially saying we’re going to do this lease-purchase but hang it on our bond issue in April so that if it passes, we can pay off our lease-purchase and it would be part of our bond.”

The only requirement would be that the lease purchase is paid off in the same fiscal year. “So, we have some options,” James added.

Board President Dr. Shawn Strong asked for clarification. “Help me understand,” he said, noting this doesn’t feel like a lease-purchase situation. “If you default on a car, they come get the car. If we default, they’re not going to get the track.”

“It’s just a special brand of funding,” James replied. “I would be lying if I didn’t say that it’s not a way around getting a significant construction purchase without going to your community for a vote. It kind of legally maneuvers around all those obligations to do that. If you’re going to do it, you need to have excellent credit as a school district. We are in a position where we have excellent credit, so they are willing to do that knowing we can pay it back.”

Board VP Hannah Swann asked what the interest rate would be on the bonds as opposed to the lease-purchase option.

James noted it would be slightly lower — in the 3.5% to 4.1% range — and, as noted earlier, the lease-purchase rate would be 4.182%.

“I’m impressed with the rate,” said Dr. Strong.

James agreed. “I thought four percent was decent for a lease-purchase option,” he said.

Board member Mark Baker, who works for Mid America Bank, said the rate was reasonable.

Swann added that considering inflation, the rate was solid. “They’re not making a lot of money on this, right?”

“They check our credit just like they would if we as individuals buy a car,” said James. “We don’t have a lot of debt, but we make our payments.”

“I don’t like the idea of debt, but I also know this needs to be done, and if we’re going to be a new school, we need to get every dollar we can,” said Dr. Strong.

James considered the budget over the next 10 years. “I don’t like the idea of being down $62,000 in Fund 1, but I know that with the increase in assessed valuation, I think we’re going to look good every single year,” he added. “With an increase in AV, in a year, we’re going to recoup more than that payment. I don’t know that we have a choice. We have to resurface our track. There’s no way around it.”

Baker agreed. “If you look at the track, it seems to be in pretty good shape, but I challenge anyone to go run on it,” he said. “I think this is something we need to tackle. It’s not only an investment in track and any other extracurricular activity, but PE classes use it all day long. It’s a classroom, and I think it needs to be done.”

James asked board members if they agreed with the concept.

“Can we put (new) lights on the existing poles?” Swann asked.

“We should be able to,” Dr. Strong replied.

Athletic Director Chris Minnix noted that replacing the lights and upgrading the poles would cost about $150,000.

Board member Lori Greer added that with her job at the Missouri Department of Transportation (MoDOT), poles are very expensive, and there is a long wait time to get them. “You’d be months out trying to get them,” she said.

Dr. Strong believes the existing poles are in pretty good shape.

Baker inquired about grant funding through electric companies; James said he would look into it.

Dr. Strong noted that when he gathered estimates three years ago, the recommendation was to change out lights on a 1:1 basis and add as needed.

James replied that he has about $75,000 in the budget for those kinds of decisions.

A red track surface would be more expensive, but Dr. Strong said that includes a wear surface, which adds life to the track.

“People get invested in what color their tracks are, so do I hear a preference?” James asked.

“I’m just wondering, is it going to be the right ‘red’ (color)?” board member Naomi Klouzek asked. “If it’s not going to be the right red, I don’t want it.”

“The nice thing about it is if we do it and find out there’s a lot of pushback on it, we can roll it into the bond issue later,” said Dr. Strong. “These all need to get done, unfortunately. The fencing is the only thing that’s really optional, but if we get a new track, that fencing will need to be (updated).”

James added that he thought $33,000 for new fencing came in about $10,000 less than he expected for 1,000 feet of fence.