001Call to order the Crestwood School Board special public work session. Please rise to the Pledge of Allegiance. Okay, good evening everyone. Stephanie O'Terra is not here tonight, so I'm going to do the roll call for attendance. Miss Vibla. Here. Mr. Chater Zugaric. Here. Mr. Gallagher. Mrs. McGovern Capshaw. Mrs. Romanishan. Here. Mr. Naimy. Here. Mr. Stavitzki. Here. Mr. Patty. Here. And Miss McCarty. Here. Seven members present. Thank you. I'm seeking a motion to adopt the agenda for the evening. I'll second that. Or I'll make the motion. Second. All in favor? I. Any opposed? Thank you. Mr. Benz will be presenting this evening and introducing everyone. Yeah, I'll be presenting. The agenda actually calls the next item for questions from the public on agenda items only. People are welcome to come up with a question now if
002they like, but we have two presentations tonight that we'll be taking questions throughout the presentation. We put this on here just in case anyone wanted to ask anything in advance. So, we'll start there. Any questions from the public prior to the presentations? No. Okay, as a level set tonight, like I mentioned we have two presentations that will be making. I'll be leading one and then we have a special guest tonight, Mike Hass from Verity will be leading the second. And there's not this is really an informational session. There's nothing going to be voted on, decisions aren't going to be made. This is going to be an opportunity to share information with the board and the public and ask questions. There'll be another opportunity on the work session on May 14th and then if the board
003chooses to pursue some of the ideas that are presented tonight, they wouldn't be voted on until the May 21st regular board meeting. So, tonight's informational only. And we do have some special guests here from from out of town that I'd like to introduce and ask each of them to come to the podium and introduce themselves, kind of explain for a minute your role with supporting the Crestwood School District and in particular what your role would be if the board decides to move forward with the bond issuance. So, first we have Brian Kosolansky, the bond counsel from the Esquire or Esquire from the firm of Stevens Lee, Stevens and Lee. Good evening everybody. My name is Brian Kosolansky. I'm a partner with Stevens and Lee. We've been the school district's bond counsel for probably over 30
004years now. We've done most of the financings for the for the district and what I do as bond counsel is I'm responsible for the resolution, all the debt act proceedings that we have to file with the state, all the closing documents, the tax opinions, really everything that needs to happen from a legal standpoint with the help of the solicitor to get your bonds from approval to closing, get the proceeds where they're supposed to be. Happy to answer any questions, but you'll see me throughout that process and and we'll be here again you know to answer any questions on the resolutions the night that you have them. I'll I'll add that while the district doesn't issue bonds very often, we've been doing trans almost on a regular basis. Brian's also our counsel to shepherd us through
005that legal process as well. >> if you remember in 25 we did the the bank note deal. Very similar process. The ordinances or the resolutions look the same, the filings were the same, the closing documents. Bonds and notes, they follow very similar process. There's a little bit more to the public offering side, but it's the same procedural process that you've seen before on that 25 deal. Okay. Thank you. Next we have Chris Hofford, the director from the Stifel Public Finance, a bond underwriter. Welcome Chris. Thank you. Good evening. So, my firm Stifel Public Finance is a bond underwriter. So, our primary job is to find investors. So, when you go to the public markets, it's not like going to a bank up the street where you're interacting with one investor in in an issue of
006a bonds, you're you're actually going out to investing public. So, our job is to find those investors and set the interest rates. Supplemental to that, we also assist the deal team with the structuring of the issue. So, getting it to the approval process to actually marketing it with your rating process that we'll be assisting with and coming up with the ultimate plan of finance the most cost effective way to reach the district's goals. So, my firm is the number one underwriter in the country of bond issues for the last 12 years and we're uh, specifically number one for K through 12 nationally. So, about half of all the about 800 to 1,000 bond issues that we do uh, annually are for school districts like yourselves. Okay, and Ryan Hottenstein, senior vice president from FSL Public
007Finance. Welcome, Ryan. Thank you very much. Good evening. My name is Ryan Hottenstein. I am with FSL Public Finance. We are a municipal advisory firm. So, our role in the transaction is to work with the entire financing team. So, that would be the district, the underwriter, bond counsel, and shepherd that process through from beginning to end. So, that's including working on putting together the offering document, working with all of the players, taking it through a rating process, getting everything ready to go to market. And then ultimately, when we are working on the pricing structure with in this case Stifel, make sure that that when we go out to price those bonds that the interest rates we received are on market and where they should be to ensure that you're getting the best possible deal that
008you can and ensuring that that cost of capital is low as we possibly can given current market rates. So, that's our role. Thank you. One point I want to One thing I want to add to Ryan. So, Ryan serves as a fiduciary to the district. So, he is solely serving you. Whereas, my firm as an underwriter, we have to deal fairly both with the issuer as well as the investor. So, that means when you have a bond issue, we have to make sure the investor understands the investment they're uh, making, that all the disclosures necessary, they understand the security, the credit factors related to the issuer, and so forth, so they can make an informed investor's decision. So, we have to deal fairly with you as well as the investor. Whereas, uh, Ryan's firm, they're
009making sure that we're getting the best pricing execution in the marketplace. And as Chris said, we have a strict fiduciary duty to you to represent your best interest. Tommy, can I ask you a question? Sure. Um, just I'm a new school board member, so I apologize for an advance if I'm inappropriately asking, but my question would be like, what do we pay fees as a district for each of these services and how does that work? Or and is there a common fee that all districts in like a set fee or is it negotiable? They're negotiable. Um, we have worked with the district for a number of years and it is fixed fee. It is based on the structure and type of uh, financing and same with regards the underwriter and bond counsel. Um, so with
010an underwriter, it is based on size though. So, there is an underwriter's discount which is fixed by size and then it goes up or down depending on the size of the of the bond. The underwriter's fee or underwriter's discount, most of that goes towards sales force to try and get those investors to buy the bonds. Okay? And we all work on a contingent basis, so there's no out-of-pocket fee to the district until ultimately issue closes. And then all those issuance costs were paid out of proceeds of the bonds. So, the district wouldn't be making those uh, expected to write a check. It would be funded by the bond issue. Yep. And we'll see We have a slide in here that shows if we move forward with the issuance, the closing costs, where they actually go.
011And as Chris mentioned, that's what I was going to mention. Um, all three of these organizations, I speak with them throughout the year for various reasons. We don't get charged at all unless we move forward with the borrowing. That's the only time they get paid. Okay? Good, Nance? I'm going to assume yes. All right. So, the reason I'm sitting over here today instead of my normal spot is when there's questions from the board or from the public, I may sit down and let one of these guys answer it depending on what the the the question is. So, we'll see how that goes. So, you know, as mentioned and as advertised, um, what we're here to talk about tonight is capital. And we're doing two presentations. The first one is financially focused that talks about if
012we move forward with an issuance, how would it be structured, how much could we borrow, how all that would look. And then the second part of it is, if we're going to borrow that money through a bond issuance, what are we going to spend it on? And Mike Haas from VeraGe standing in the back, he's going to lead that presentation and then I'll be sitting down. So, I'm starting with and and I apologize if anyone feels this is patronizing in any way, but I thought we just do a level set on what really are capital projects and how are they funded and um, what could those funds be used and arguably more importantly, what can't they be used for? So, when I think about the definition of a capital project, I could pull out a
013a finance or an accounting book definition, but I think it's easier to conceptualize just just by giving examples. Uh, typical capital projects are building construction, renovation, additions, you know, HVAC, sewer, technology infrastructure, um, parking lots, fields, large stuff, uh, stuff that we don't pay for and typically don't pay for in one fell swoop out of the operating budget. Important to know is that capital funds cannot be used for salary and benefits, routine maintenance and minor repairs, instructional supplies and consumable consumables, utilities, and general operating expenses. That needs to be spent paid for out of our operating budget. So, where does this funding come from? Um, basically, there's three places. The first one is borrowing, either in the form of a loan or a bond issuance. And which one you choose to do depends on many
014variables. One of them is the size and what actually you're borrowing it for and that's if people like more detail on that, I think this group could probably answer it better than me. The second one is grants and as this group knows, we did get a couple nice grants recently. Um, the the one for the roof at uh, Fairview in particular. Now, grants are different in that when you get a grant, it's typically for a specific defined project. You have to use it for that project. Similar if you get a mortgage to buy a house, you have to spend it on that house. You can't buy a different house, you can't certainly can't use it for operating expenses. Where if you're going to do a capital bond issuance, there's more flexibility. It's got to be
015on a capital project, but you could, you know, with some restrictions, kind of choose what you'll uh, spend it on. And then the last one, if the district happens to have an existing capital fund, that money's in there from budget for from transfers from the operating budget or excuse me, the operating accounts or from maybe um, borrowings that were done in the past that there's a little bit left over from. So, why are we having a special work session um, today? Well, the district is considering a bond issuance to subsidize some capital projects. Wanted to be transparent on uh, with the public on how the bonds would be structured cuz there are different approaches that frankly could be debated on which one the best is. So, we wanted to be open and transparent about that.
016And then in the second uh, part of the the meeting, public input on the project selection. The amount of projects we would like to do far exceeds what we could responsibly borrow. So, we're going to have to make some decisions on on what our highest priorities are. So, questions on this slide. No? Okay. All right. So, what has gone on here a little bit in the last couple months that I felt we got in a bit of a chicken and an egg syndrome where the the board and um, I knew that we wanted to do some capital projects and the question kept coming up, well, how much could we afford to borrow? And then the question follow back up question be, well, what are the top priorities? Let's see how it works. And we're in
017a cycle there and we got slowed down a little and I finally just had the epiphany that we we got to get an answer to that question first. How much can we borrow? At least have me make a recommendation to the board with the support of this group on what I think is how much we could afford to borrow. The district may decide to borrow less than that or you may disagree and say, no, we could afford to borrow more. But I felt compelled to least make a recommendation to the board and take things from there. Fair enough. Okay. So, to go about answering that question, uh, the first thing that Wait, that the 2.4 million number is supposed to be circled there. I don't know why. And it is on my PC, I swear
018to God. So, I don't know what gremlins you have over there, Jonathan, but that that should Okay. So, I wanted to take where do we stand now? The district does have an a capital account. There's about a million dollars in it. Um, I don't think that's uh, that's not where it should be in my opinion. I I would really like to see at least twice that amount. Uh, there's things that come up unexpectedly and not to have any money in the capital account to use for those things, I don't think is is responsible. So, even though a million dollars may seem like a lot when you think about, you know, your own personal finances, for a school district, that number is is very low. And I think, Pat, you could vouch for that. >> [snorts]
019>> Um, so what about our existing outstanding principal on any capital bonds or loans? We're just fell under the $20 million mark right now and outstanding principal. The the max allowable by the state is around 105 million. Actually, I think it's a little higher than I think that I understated it there. Uh, the average interest rate on our outstanding bonds and loans is very low. It's been very well managed. It's about 2.87%. [snorts] There's only one borrowing out there that has a rate above four and we have some that is are as low as 2.0%. So, well, that's good news that it's been managed well, it's bad news that there's not a a real refinance opportunity there that could create a lot of capital for us without it costing a lot of money. And the
020last item which matters to what the cost of the the borrowing would be is our S&P rating. Um, we were downgraded to triple B a couple years ago and last year when they came in and re- and that was with a negative outlook. The S&P rating model has two components. There's the rating itself and the outlook. We were triple B negative. Stable's the one in between. When we went through that process, they upgraded the outlook from negative all the way to positive, so a two two-step jump, which is good, but they didn't increase the the rating itself. Now, if we do issue a bond, um S&P will re-rate us, correct? Correct. And that that has to to to happen. Um so, we're hopeful that that gets upgraded, and then then maybe some of the assumptions
021we made on what the cost of the borrowing will be is actually going to be lower than what we what's built in here, but we'll see. Questions here? No? Okay. So, I'm starting here with a a look at our our current debt service schedule. And for and our our debt schedule extends out to 2040 from now, and the important number to to notice there is that 2.4 number at the top. That's going to be a recurring number in this presentation. And what that number represents is how much we need to build into our annual operating budget to pay on our debt service. So, you know, every spring when we go through the um the budget process, I build into the budget and a um a dollar amount that I know we need to pay on
022our debt service. And right now that's $2.4 million, you know, rounded over the next couple years. So, that's an important part of what we're going to be talking about. So, any questions on what this represents? No? Okay. So, you'll know and that's supposed to be a a regular arrow curve. I don't know what happened what's happening here, but and you'll notice from '29 to '30 we have a I don't know what to call it a cliff, but a drop-off on what that debt service is expected to do. It's supposed to go from about 2.4 to 1.8. And then you see another one where it's expected to go from, you know, or 1.9 I should say, from 1.9 down to 1.6. And I I highlight that as a borrowing opportunity because when you have a decrease
023like that on the horizon, you are able to to borrow, whether bond or loan, and and spread it out so that you never go above that 2.4 million, which I think is important for for our operating budget. So, that was kind of my guiding um force on what my recommendation would be. And what I'm saying is how much we could responsibly borrow is really a function of the impact that it has on debt service. And my recommendation is that the board does not borrow an amount that would require the $2.4 million level to increase either this year or in any year going forward. So, that's still not a number that I know that you you would want, but um so, everyone should have a a hard copy of this eye chart that's in front of
024you. Tommy, can I ask you a question? Tommy? Yep. The $2.4 million debt service, why do you not want to go over that? I mean, is there a benefit to or not going over that? >> Yeah, you're kind of getting into my next next slide, but I'll answer it though. Um I believe our revenue will continue to go up. By how much it'll go up, we don't know. But an important metric is debt service as a percentage of revenue. So, if that $2.4 million stays flat and the revenue goes up, the debt service as a percentage of revenue is going to go down. That's a good thing. That's something S&P would like. That's something that doesn't that prevents the board from having um pressure to divert funds from other places to handle that debt service
025or increase taxes or, you know, take money out of the operating budget somewhere else. Now, but it is a fair and arguable question. You may say, you know, the capital projects that we need to get done far exceed what we could borrow and keep that at 2.4. But at least I think this is a place to start as a way to look at it. Tommy, can I just add one point, too? The the district's current millage is able to afford that $2.4 million run rate, right? So, if you increase above that $2.4 million, something has has to happen, whether a tax increase or, you know, finding money from from the operating account or what happens. So, that $2.4 million as the existing run rate, your millage is already baked in to support that level. Okay.
026All right. So, back to the eye chart. The The column on the left, that's just the exist existing debt service that I showed you on the previous page. The other three um columns, two through four, they each represent different ways that the bonds could be structured. And actually the the one that I'll call it column three, frankly, was the one where I thought I was going to end up recommending, and for the finance committee and some of the administrators who saw an earlier version of this presentation, it was modeled based on that assumption. But once I had those meetings and saw that the appetite for some for borrowing was real, that's why I called the brain trust, and they said, "Well, let's model this a few ways and see where it really lands." And it
027turns out columns three and column four all violate that $2.4 million guidance. Um the middle one not by much, and only for one year, but the one on the right you could see you get up to, you know, 2.7 if I if I remember, and when we're currently at 2.4, that that's a you know, that's that's a jump. But the one on the left adheres to that rule, and the reason I was surprised that that was the answer is cuz that does call for a refinance of that one borrowing that is over 4%, likely to a higher interest rate, but it still allows the debt service to be flattened to stay within the the $2.4 million um guideline that I'm talking about. So, the reason I said this is debatable and it's something I wanted
028to show, and being completely transparent, if you look at the bottom, and again, you got to look at the sheet, column two, the one that um is the recommended, the total cost to the district between now and 2046 is about $35.3 million. The one in the middle is almost the same, $35.2 million. The one on the right is the cheapest. It's $33.9 million. So, an argument could be made that says, you we want to pay the least amount of money over these 20 years, even if that means debt service increases. That's a fair argument. It's not my recommendation, but I don't want to hide that that argument is out there that someone could make. Now, I did ask this group what their experience has been and how different districts or different municipalities do it, so
029I would like to stop for a second and maybe sit down and let you guys talk a little, whoever wants to go first on what you think about the different approaches and and which one you think is the best and why. Yeah. Thank you very much. When we take a look at these approaches, it really is based on what our client is looking to do and what the needs are for your budget. So, if you come to us and say, "Hey, we've built in capacity, we've built in extra millage, and we want to have additional and be able to afford that higher amount," that's one thing. Then we'd say, "Okay, let's look at this avenue." However, if you're saying, "We really need to keep and we'd like to keep our budget in line with where
030our current spend is," then the recommendation would be different. And so, given those guidelines and given the understanding that here the district would like to keep its capital expenses at least um from the business side at the same amount, our recommendation would be one under those scenarios. If you came back to us and said, "Hey, look, we're looking at something different," we would then restructure and come back with a different alternative. But under the guidelines that we're looking at in this scenario, we would be looking at recommendation for number one when you take a look at the average rate um compared to the others and the total costs, it fits within your budget. I have a question. When do you have to know like what we're doing by what point? We don't have a superintendent
031right now, and I think it's vital that a superintendent would, you know, weigh in on these options and see what's best. So, at what point could we like over the summer say, "Hey, this is what we want to do" or It really depends. It really depends on when you need the funds. So, ultimately, it we would work back from there. If you said, "Hey, we want these funds and want to be able to start construction in a certain period of time," we'd say, "Hey, we really need to have an idea of what that looks like 90 days ahead of time." So, it really depends on when you'd like to be able to start these projects. Yeah. So, Brian, I think I asked you this question, and you had told me that if the district wanted
032to use these funds for capital projects this summer, and therefore have the money by June 30th or so, we would need to have the board approve this um in the May board meeting. Is that is that >> takes a little time to get from resolution night, filing with the state, doing the rating process, the underwriting process. So, really, if we approve it, say that May 21st meeting, to get the resolution part of it going, cuz it's a 30-day process just for the filing with the state, you're probably still looking at the end of June as probably the quickest time frame to have funds available to start those projects. Now, the one thing we did in the draft of the resolution, and it will stay in the resolution, is if you need to start some of
033those projects before we can close, we have the reimbursement provisions built in so that if you need to spend, you know, a little bit out of that million-dollar capital fund just to get those projects going, as soon as we close, you'll put that money back in that capital fund. So, you have a little bit of flexibility, but as you know, as you start projects, those bills start coming in pretty quickly, and if you have a million dollars on hand, it probably will go pretty So, you're saying it's go through a process and you don't have to make a decision right away. Is that what you're saying? No, you're going to need to make a decision fairly quickly. If you want to start this construction process in June and be able to have the cash to
034start paying contractors, we really are looking at having an idea in May at your meeting to say, "Hey, yeah, go ahead and move forward." >> Now, you will have flexibility under that resolution to change some of the focus of your projects as you know things come up. What we have to do from a tax standpoint is you have to reasonably expect to spend the proceeds within a 3-year period from when we issue. Now, you have to have enough projects to support it up front, but every school district has more than the $7 million that we're talking about to do. But you will be able to say, "Okay, we think we're going to do this set of projects." And as the summer goes by, other priorities come up, you can reassign those funds. But you know,
035if we do issue borrow for seven, it's going to be $7 million of project costs. If you need more than that, we'll have to do the process over again. And that's why you really want to have a pretty good idea of those numbers before you spend all the costs to get it in place. >> Let's just say we decide not to do it. We'd have to wait a whole calendar year then? No. No. Oh, we can just >> Not at all. It's really just when you want to start projects. Okay. And I'll jump in here because I think Tom in as far as the building grounds, we haven't had a great building and grounds discussion with the whole board, but we have so many we have severe projects that we are if we don't take
036care of them they could be impeding our school year. So specifically we'll go over them during the project presentation, but the fear is if we don't get some of these projects done this summer, we could hurt our school year like our school days next year. So as much as I would love to wait for a new superintendent as well, there's certain projects that I think are are going to be almost emergency type level things that if we don't manage them now, this summer at least, we could be hurting our district in the future. Well, how long are we giving the buildings and grounds person to come in and assess? Well, actually uh this is a very >> one, so I don't know who's making these decisions. Well, Verity that's what Verity's going to present to
037us. They they brought in engineers and everybody to do a presentation to us. But I mean, you'll specifically some see them. >> be? Right tonight. Yeah. Yeah. So I know I understand where you're coming from cuz there's a lot of money and big decisions, but I think we are holding things by threads I think right now. And I think we really need to look at these projects unfortunately. And and also um the $7 million number that they referenced, if you look at the top of the eye chart up top, you'll see that each of these scenarios create $7 million in additional project fund. But to Brian's point, that doesn't mean you need to spend all $7 million this summer. We could do a million dollars project this summer, sit on $6 million in the bank
038earning interest, And then >> That's what I want to ask. What happens with the money? We have to take the full $7 million now. >> But we could we could put it in the bank. And put it in the bank and earn interest cuz again, we don't necessarily need to do all the projects. We there's just specific ones that we're kind of nervous about. >> 3 years. But we got to spend it in 3 years. There's certain restrictions on how much you >> But we still have to take the full amount. It's not like okay. It's not like a line of credit or something. >> No. With a bond issue, all the proceeds are available at closing unlike a bank loan that you could draw down when you need it. So for example, if we
039only took five because and then we wanted seven, we'd have to go through this all again and have closing costs a second time. Correct. And there are some restrictions on how much you can earn Yeah, tied into how much you're paying on your bond issue, but you know, that's probably pretty close right now in terms of what you can earn and what you're paying on that bond issue. So that's not And how quickly your things are right. So so each of these models were modeled around a term of just about 20 years. Correct. >> Could you talk a little bit about what flexibility or restrictions that puts on us as far as project selection? Uh one of the debt act requirements is that you can't borrow longer than the expected useful life of those projects.
040Now, not every project you do in this financing has to be 20 years, but you have to have projects that will support a 20-year life so that you know, you can make the representation that as you're amortizing your debt, you're paying off the shorter life assets and that you have assets that support the 20-year you know, the 20-year life. I mean, most you know, renovation big projects that you're doing can carry that 20 years. You know, it's a little bit more difficult when you look at longer terms than that. >> Well, the WAM is significantly lower. The weighted average of maturity so the full length is 19.75 years, but when you look at how quickly you're paying principal back, it's actually shorter than that 19.75. So you do have to have you know, relatively long
041life assets. Not for everything, but you couldn't have 5-year assets and spend $7 million on that. You'd have to have other you know, renovations, things that support you know, 20 million. Which comes back to Mr. Benz's point earlier in the conversation of what are capital assets and what are the type of investments that you're looking to make. And in this case, you are talking about long-term fixed assets that have a long useful life. Brian's not going to allow you to go to market and borrow $20 million for new computer software. That's right. Yeah, if you say we're just going to get a couple computers for $7 million computers, we're not going to go 20 years on that. That No, but but but clearly you could spend a million dollars on shorter life assets if you
042have the bulk of it going to long life assets. So there is flexibility in terms of what you can do within that range. And that's why the resolution is going to be drafted very broadly to just really say any any capital projects that the district needs to do with those proceeds. And that gives you the flexibility that you can make decisions. Okay, you go through the summer and you think you know what you need, but the fall comes around and something catastrophic comes up. You can reassign those dollars to that. It will use proceeds differently, but you'll have that flexibility all the way through until you spend all $7 million. So how do you if you have like five projects >> Mhm. and one has a lifespan of five years, one has a lifespan of
04320. Like do we distinguish who distinguishes Really just look at how much how much money you're spending on each of the lives of the assets and you look at you know, those are the points of >> It would be a blend. >> said pay off the ones with a earlier lifespan first, but is it separated out like that? >> really. It's it's really [snorts] just a matter of you are amortizing your debt from you know, when we close for the 20 years. So >> you know, you just have to have if you have a lot of shorter life assets, you may need to shorten that life up a little bit. But we're assuming in this analysis that there are going to be the longer life assets that can support that amortization all the way through
044the 20 years. Other questions on this slide or for the team now? Okay. Okay. So um Nancy, this was your question earlier where I indicated that if you look on the left, if you revenue of the blue line, if that goes up, debt service stays flat. What you see on the right happens. Debt service as a percentage of revenue drops. That's a good thing. That's that's a positive that we want to see. Now, I would hope that our revenue goes up by more than a million dollars a year so that the um the slope on the the the graph on the right becomes even more severe, but that's what um is kind of is driving the the answer to your question on why we try to stick and keep it at 2.4. >> What's our
045trend for the average we go up every year? I don't have it off the top of my head, but it's lately it's been better than that. It's been closer to $2 million. But that but that adequacy gap money, we don't that's not going to last forever. Okay. All right. This also is the the detail on um the I don't know if we even need to get into these weeds, but I put in there just in case someone wanted to to go there. And the key number that you'll see is that the project fund deposit it would be $7 million. The the par amount on the bonds is actually 8.275. Uh investors would have to pay a premium on this, which I'm going to ask this group a question on in a second. But the reason
046it's so high there is this if you remember the structure that we're uh looking at includes refinancing one of our existing loans. So a big chunk of that's going to pay off that loan cuz and then it's going to put get pushed out going forward. And then the actual closing costs are the three ones you that see at the bottom, the cost of issuance, the underwriter's discount, and the bond insurance. So it's not cheap to take out take take out a bond. So that's why um it wouldn't make sense to say split this in half and do three and a half million this year and then another three and a half million next year. Um but the one question I did want to ask and whoever wants to step up here quickly, why do investors
047need to pay a premium on Crestwood School District bonds if they want to buy them? Sure. So that is a function of how we price bonds. So when you price bonds, you have a coupon or the interest rate and the actual yield. The yield is what the return is the investors expecting. So when we talk about par bonds, that would mean the coupon and the yield are are the same. So say 5% coupon yield 5%. Those bonds are par. So the investor is paying you know, for a million dollar bond, they're paying a million dollars, right? Based on investor preference, they may prefer a discount bond or a premium bond. A discount bond would be where the coupon is 4%, but it's yielding 4 and 1/2%. The inverse of that is a premium bond where
048the coupon is 5% and the yield is 4%. And depending on the interest rate environment, that will dictate how a investor will want that couponing structure. And so currently uh that structure is a 5% coupon structure. And so because of where interest rates actually are, it creates that differential between the coupon and the yield that the investor is earning. So the investor is actually purchasing they're paying a premium to buy those bonds that have that 5% coupon. That gives gives them call protection. They have a stronger coupon a higher coupon that if they want to trade the bonds later cuz these investors when they buy the bonds the day of the sale, they're not necessarily the same holders of those bonds a year from now, 5 years from now, 20 years from now. Those change
049hands just like a stock, right? So, they there's a secondary market where those investments or or securities are traded day-to-day. Having that 5% coupon makes that bond more desirable in particular interest rate environments like we're in now. Uh so, what that does is if if these were sold at a par, right? Your bond par amount that you'd have to borrow would be higher because there's less proceeds to deliver the same amount of project fund deposit. Uh so, because of the environment we're in, we're able to you're able to issue less uh in total par amount because that additional premium the buyers are paying provides additional proceeds reducing the size of the borrowing. That's a kind of long-winded approach, but it's really just uh related to investor preference. And what that 5% coupon also does is
050provides more optionality. So, just like you can refinance your mortgage when you uh you have a high interest rate mortgage and rates are lower, you can refinance and and take lower debt service, the same is true for a bond issue. So, with that 5% coupon, that gives you more optionality down the road that when these bonds become callable in 5 years, you'll be able to refinance them and it depending on market conditions, that 5% coupon is going to provide higher optionality, a greater chance of you being able to refinance into lower interest rates because that 5% coupon is higher than if we issued 4% bonds, for instance. Ryan, any anything to add there? No. No, I mean, I if you need examples, I'll be happy to give you examples of why um people want that
051higher coupon, but I also know with bond math, sometimes it gets a little fuzzy for some people, so we could go into depth um and I'm happy to do that if you would like. But if there are no more questions, I won't add any. The only question I have is in regards to what Tommy had mentioned that if we split this in half and only did the half amount, are our costs still the same? Like the cost of issuance, this discount, those kind of things, or is that cut in half, too? No, so majority of the the fees that you're going to pay, well, not a majority, a lot of the fees you're going to pay, you're going to have to pay no matter the size. So, the financial advisor fee, the bond counsel fee,
052the rating fee, so that structure is going to be very similar. Some of them change based on size, like we talked about the underwriting discount, that will be based on the par amount, the bond insurance will be based on your total debt service. So, those things will change, but a really large percentage of your cost of issuance are going to be fixed regardless. So, by breaking that up into two different series, you're going to be paying it twice. So, it is more efficient if you know the amount, you know how much you're going to need over the next 1 to 3 years is to borrow at one time, especially when you're looking at the level that you're borrowing and staying under a $10 million bank qualified number, it makes more sense to do one issue.
053Thank you. Okay, so back to the question of how much can we afford to borrow? So, my recommendation is not more than $7 million cuz we want to keep the debt service flat. Now, it's a recommendation, it's a board decision, and I acknowledge that there's arguments um to go either way with it, but back to that chicken and egg, I felt like we needed to get an answer out there so we could have the second presentation and say, "Well, what can we actually get for $7 million?" So, any other questions on the financial side before we bring up Mike. Tommy, if I can just raise one more one more issue, just so expectations are are realized when we bring the paperwork to you. If we if we, you know, Tommy calls tomorrow and say, "Let's
054get everything ready for, you know, for May 21st." The resolution that we're going to do and we're going to say we want to follow that uh scenario number one, which is the $7 million plus the refunding and that was eight and a quarter, say. The resolution, since it's a parameters resolution and the bonds haven't been priced yet, the number we're going to put in that resolution is probably going to be more like 10 or $11 million cuz what happens with the state approval is they approve an annual debt service amount for the school district. And since the bonds aren't priced, we want the underwriters to be able to move bonds around and get the best pricing for the district so that we don't want any of those years to be exceeded, so we gross those
055numbers up and all it requires us to do, you're only going to issue what you want, the $7 million plus the refunding, but it allows that flexibility on pricing. As soon as it's priced, we send a letter to the state saying we issued, you know, eight and a quarter, take the rest of it off. So, I just wanted you to know that that's not the number you're borrowing, but it builds that flexibility in. Um but I didn't want to show up with the $10 million and say, "What's going on with this?" So, uh but that's the reason. It's much easier to take that off with a letter than it is to violate one of those years and have to start the process all over again with advertising, resolutions, filings, all that stuff. So. Thank you.
056All right, so again, any other questions? So, I think the last thing is just my disclaimer. We everything we presented is as best as we as accurately as we can, but we'll see what happens when it actually goes out for issuance. Some of those numbers could change, but all the assumptions were made conservatively, so if they change, hopefully it'll just make things better. Okay. All right, Jonathan, could you switch? And So, next up is uh Mike Hass from Verity and um Mike and Verity, they've been on site doing a assessment of the district's facilities, both elementary schools and the high school. So, I'm going to turn it over to him to to lead us from here. Thank you very much. >> [clears throat] >> Little shorter than you. Yes, thank you very much for Oh.
057Yes. >> [clears throat] >> Yeah, thank you very much for having us, having me, I should say. Um Mike Hass from Verity. Um obviously, we've been partnering with the district, thank you for that uh for the last few months. Uh we were able to help the district to submit two grant applications for the PA uh facility improvement grant. So, I'll touch on that here in a second, but um just wanted to thank you very much for having me. So. Um So, you know, this is really the key slide. Um where you see the additional scope priorities, and really the uh for the grant applications, too, we have slides broken out for that, so you can kind of see the detail of the scope. Um some of these the district has pursued on their own, so
058I'll kind of touch on those and if you guys want to speak on that, uh please do, but um really looking through the lens of the grants uh out there that have been received and or applied for, um the first is the PCCD classroom safety grant um that the district has received just under $110,000 for. I don't know if you want to comment on that. >> Yeah, I I think the board's aware of of that grant that we were approved for. We didn't actually receive the money, it's a grant that as we make purchases, we'll get reimbursed by by the state. So, that one we have and that one we're hoping to get done ideally um this summer. We do have the allotted to with that grant to wait till next summer if we had
059to. Um and that'll depend on our ability to the how much how many projects we could get done in a few months. Assuming we want to do this in the summer and that's I assume that we're going to want to do most of these projects when school is out. There's some, if we did all of them, there's some you could probably do while school's in, but most of them you you can't. So, if we don't get it done this summer, probably looking at waiting a year. Tommy, do we have to do any matching funds on that classroom safety grant? >> No, no matching funds on that one, but the next two, you could take you could >> two the next [clears throat] two is the >> just ask a quick question? Uh do we have
060these slides or do I have to quick make notes? You guys do have these slides. >> Do we have them? Yep. The that he's presenting now? Yeah, it's posted on district website and in your email. >> Okay. Yeah, so the next two the grant applications that we helped um you know, submit [clears throat] what, about a month, month and a half ago for the high school controls building automation systems, um that's the $1.4 million that you see there. And then also for the Rice Elementary roof, um that grant application, to answer your question, um would require a 25% match. Um so, those have been submitted. Um our contact from the state that we spoke with, you know, this is kind of an interesting grant because it's not retroactive where you do the project today, hey,
061hopefully you get the money, you can throw it on top of it, right? So, you have to wait to hear if you and you guys obviously got awarded it last time, so you understand how it goes, but um our contact from the state um said that at the earliest and their hope is that you would hear about the award in November this fall. Um I think, correct me if I'm wrong, the first time around, it slipped into Q1 of the following year. So, there's a chance that it could slide into Q1 of 2027, um in which case these these prices are pretty strong a year out. So, I I would say um just from from walking the facilities with our engineers, you know, the high school controls is really a top priority for the district.
062Um I hope that the grant comes in. If the grant does not come in, I would still say that that is is really a top priority if not outside of the sewer, the the top priority. >> years you got on that roof left, about? I'd have to get back to you on that off the top of my head. Yeah. And we actually, I could talk to that briefly, the um and even if John wanted to jump in on this ship guy because we did have an analysis done on that roof, right, John? But not to the point that we're in dire So, that's that's already addressed and we have no issues going forward. Yeah. So, we're not in we don't feel that is our dire project. Okay. No. Out of the two, I would definitely
063say controls over over the Rice Elementary roof. >> [clears throat] >> Yes, so your building automation system. So, it runs basically is the brain behind the entire operation. So, it's going to run your HVAC really everything that happens within the district. Right now, you guys have a Siemens system here which is proprietary. So, you know, hey, you bring in a Siemens system, it's you're locked into Siemens for forever for you know, whereas what we are proposing is we would swap that out for an open protocol open procurement system that basically we would have to that control systems would have to um perform at a high level for you to keep it and if you ever wanted to swap it out, you could switch to whatever brand you wanted to without being boxed in. Damian, to
064put you on the spot, could you talk for a minute? I know you're struggling with your voice about what problems the district experiences on a daily basis that this project would resolve whether it's through a grant or district funding. Yes. So, that's that's already addressed Yeah, so that number assumes we strike >> [snorts] [clears throat] >> Yeah, the other the other aspect that would be rolled into this is a our software called Orchestrate that would really allow you to control the buildings literally from the palm of your hand at home. So, if there's an issue with a rooftop unit or you know, whatever it might be, you'll be able to pinpoint that from home and we have monitoring for that too that can help you to diagnose it. So, the goal is really to keep
065you as loose as possible so you're not boxed in. So, you know, you can operate the buildings, live your life and not have to do too much. Question for you. Yeah, the Orchestrate software, is that part of that price? That's part of that price. Yep. >> Thanks. Yep. Um so, [clears throat] the next is the LSA grant plan to be filed here in the fall of 2026. That's for Fairview parking lot. That's for the paving there. Our price our rough order magnitude price on that is between 1.3 and 1.45 right now. Yep. So, to do a level set there, if we were fortunate enough to be allowed to apply for the LSA grant and receive it, it's not going to cover all of that. It might be a couple hundred thousand dollars which will allow
066us to do certain portions of the parking lot similar to what we did in Rice a couple years ago. But if we wanted to do it all, it that's the price that we would be looking at. And the benefit with us and I have a I have a I have a slide on this. I I don't want to kill you with slides, but the benefit too with us is you know, we have a guaranteed no change order. So, you know, when you when you look at each of these scopes, anything within that selected scope of work, we cannot come back with a change order. So, our final price is our final fixed price. Um so, Crestwood funded um So, the high school gym renovation which you're seeking sponsorships for which is around 200k. Um I'll
067let you speak to that, but that's everything from scoreboards to sanding etc. I don't know if I need to talk on that. Yep. Yeah, so that um that $200,000 number there in my mind that would encompass the cost associated with the floor that the board already approved. Um shot clocks which we know we have to do within a couple years. Scoreboards that are compatible with it. Some wiring work for electricity and and data and we are working with a vendor to hopefully get some sponsorship for that. So, it wouldn't cost that much, but we don't know if we'll get it. So, I said at least you know, include that on the slide. >> [snorts] >> Yeah, so that number assumes we strike out completely on the net zero program sponsorship. So, we're paying all for
068for it all ourselves. So, hopefully that doesn't happen, but I use the worst case to put that number up there. The second [clears throat] would be the Rice Elementary pump and water filtration. I don't know if there's any comment on that. If not, I'll Well, we're still in flux with that until we find out more details, but we did we were able to with our maintenance department address the fix of it at least for the pump itself. That is now we have two pumps working, correct, John? Which is phenomenal. Um for just a very minimal amount compared to what we had planned in in December. So, I'm happy about that. So, thank you to the maintenance department. And then as far as the water filtration, we're waiting for our DEP engineers to get back to
069us, but what we are hoping to do is apply for a Pennsylvania water and sewer grant, but we would have to partner with Rice Township on that. So, we probably need to put the funding in there because there was no guarantee we'll get that. I mean, I think Rice Township will partner with us no problem, but from my understanding right now, that grant does isn't being funded at the state level. So, if the the anticipation is it will be funded, but there's no guarantee on that either. So, we might want to put 250 in there to cover the pump and the filtration system cuz I think the the pump will be about 50 to 60,000 and I believe the filtration's going to be anywhere from 150 to 175. And then I'm [clears throat] going to
070hop over the additional scope priorities for a second to go to technology upgrades. Yeah, I just got to ask. High school gym air conditioning? 2 million? 2.5 million? >> So, I'll I'll show you the the slide on that. Um so, tech upgrades, the servers and the Wi-Fi access points, you know, you're right at about 500 525 for that. And then the additional scope priorities, I'm going to go into detail here in a second. Um I don't know if you have any comment on the tech upgrades. If not, I'll get right into the Maybe Damian should at least comment why that's so important. >> [snorts] >> And that's also a safety issue as well. >> [clears throat] [snorts] >> So real quick before I get into the gym AC, I'll just touch on you know this
071is the situation right now with the high school control system. As I mentioned you have the Siemens legacy system. We're looking to replace that with our open protocol open procurement Niagara Niagara system and you'll see here for Fairview and Rice Elementary's the RT rooftop units are assumed to have factory controllers. So we would do an overlay there also with the Tridium Niagara. So let me go down to let me skip a few of these here. Yeah, definitely go to the sewer line cuz that's I hit the wrong button. Yeah, I just wanted to quickly touch on if I could to your to your question or concern about the high school gym AC. So um the a full replacement right now would would be in the neighborhood of two to two and a half million. Um
072you know cooling design is based on the max maximum occupancy of 1500 people. That also includes the bipolar ionization which is for you know healthier indoor air quality. That said a full replacement um we are definitely looking into a more cost-effective hey can we come in here and and repair that. Um you know from talking to the engineers it could be a combination of fan motor issues bearing issues or blockages or um if the ductwork is undersized that could lead to a a higher expense but you know they're confident it could be in the 250 to 350 thousand dollar range. So can I ask that are the AC units working and it's just the noise of the venting and how the venting is working? >> no there's no AC in the gym at all. The
073blowers that are in there that's what's causing the safety issue with the noise being an an education issue with the noise being so loud. The idea of going to full air conditioning in there is much bigger scope and really what we were going after here was what could is there anything we could do short short of having to go with a two million dollar solution for air conditioning to solve that you know very high decibel situation where people can't even communicate with each other in the gym. So the one thing you didn't mention that I thought might be an option is there any way you those existing blowers or similar blowers could be put on the roof instead of hanging from the ceiling so you don't hear them? With still without air conditioning though? Yeah,
074I can [clears throat] get back to you on that tomorrow for sure. I've been in the gym a lot of times. I mean maybe we get a better PA system. Yeah. Well you know you save money. I mean this is >> system is you know another topic but right now the noise level of the blowers that kick in during the winter months and Damian you can even chime in on this as well are at a decibel level that from one end of the court half court to baseline you cannot hear. Uh and you cannot give an instruction out to a another student another coach or another teacher when you're talking phys ed. >> talking for phys ed? No in during the school I'm going to tag on to hear my cuz actually when I was
075doing a walk through the school the gym teacher actually came out to me and said they cannot hear any emergency announcements or anything happening if they are in the gym. They hear nothing. So what happens >> an emergency situation no one in the gym would know to leave. What happens we don't have a control system where we can just arbitrarily turn that off and that goes into probably the larger scope of the HVAC issues. So when you get into that as what we tried during this last winter you're getting a huge build up of humidity and heat and it becomes non-productive and then all of a sudden now you're you get you actually get a temperature drop in the gym from itself. But the key component here is with what Mr. Mansion had talked about
076from a phys ed standpoint you cannot hear any announcements any emergency calls nothing of that nature uh across the board and then you add in uh two or three classes of 20 to 30 students and now your decibel level is is beyond any issues that we can handle. They do have multiple classes in the gym. I mean that that could be it too. No it's the fans. It's the blowers. Beyond a reasonable doubt. I mean 2.5 million dollars is a lot of money. And that would be just that would be AC. We're talking 250 thousand not 2.5. Move the unit up into the roof you're talking a lot of money. And we might not have to do that. So the goal [clears throat] is really to find the most cost-effective answer to it. They're confident
077it could be around 250 thousand as it is right now. Does anyone know Mr. Chuck the last time that was looked at or Yeah like serviced or anything like that. I mean the key thing here that I would say is it's certainly not a luxury item. We're not our goal is not to put air conditioning into the gym as a priority. Our goal is to make the gym as safe as possible from a communicative level and to reduce the decibel level that exists Like you've seen the bleachers lately though. I mean I put money into the bleachers. Uh this is >> in the greatest shape. >> This is for the discussion of the board and this is part of a uh of what we've I've seen you've been in the gym a few times you
078see the condition. This has been a part of a long-term planning that we want to have to move this district forward as opposed to reactionary issues that have taken on in the past. So this is just the first step in this process. Unfortunately unfortunately the issues that we are looking at are reactionary because they are fixes that are immediate that if we don't take we're going to be shutting down the school like not necessarily the gym but when we get to the other item. So that's what I think is disturbing is that we now have to look at reactionary instead of long-term. We can look at long-term but some of the money we're spending now is going to be directed towards things that have not been taken care of over the last few years. Correct.
079Our our reactionary Nancy at this point is just due to where we were in the past. So [clears throat] again I mean I they're confident in the 250k range. The goal with this was just kind of show you the two options. Um let me go back here. >> [clears throat] >> Um So looking at the sewer you know they they did review the 10 minute video that the sewer authority sent us that you guys provided us. Um so there's definitely I don't know if everybody has watched that or not but there's definitely a few significant one in particular cracks in the terracotta um which is largely the reason for some of the issues. So um you know from speaking with the sewer authority you know they're they're thinking the line is between 350 and 400
080feet. So that's kind of the numbers that we're going off of right now which is the 500k that you see there. The big question that we're trying to uncover and that we need to do more due diligence on is uncovering how many connection lines there are inverts things of that nature to really identify um you know what the actual cost is going to be. You know they think 500k is a good starting point but there's a really good chance that it's a little bit higher than that. So that is something over the next you know week week and a half two weeks that we're we're definitely going to dig into further. I don't know if you have a question on that. I just want to John to tag in here. What is your assessment from
081dealing with it on a unfortunately almost daily basis? If you want to just give cuz Tom probably does not Tom probably doesn't realize the deal what you guys are dealing with regularly. How often are they blocked and how often are you >> [snorts] >> So whatever is getting caught that's that's what we're hoping the water pushes down >> And I know there John, do you think it's that much line to the 350 to 400 ft? Would you assess? And and we're going to need cranes to be able to dig that trench. So [clears throat] Yeah, they're they're looking in and I'm glad you brought that up. They're looking into an alternative solution for that. Um that cuz if you have to crane it in, you know, they're looking into a solution that we've done in
082the past that might be able to uh handle the issue and also do it in a more cost-effective way. So I'll have more information on that in the coming days, week, weeks. And that's and that's a project that could be complete in a summer? We're hustling to to do that. We would need We would need to uncover the, you know, answers to some of these questions. And again, figure out if if this alternative solution that the engineers are thinking would actually work, in which case um it's on the table to do this summer. Yep. Um >> [clears throat] >> so I know when I did the walk-through, we we walked through a couple of different classrooms at the elementary schools. Um I would also loop in here the science labs, computer lab. Um so, you
083know, looking at some of those classrooms, the uh teachers lounge, you know, moving around some of the some of the plumbing potentially, the walls, etc. Um this is really a soft estimate. You know, what we would like to do, you know, based on our recent discussions with the engineers, is really sit down and say, "Okay, exactly what is it that the district would like to do for these rooms?" Uh so that we could put a hard fixed price to it. You know, there's kind of the Maserati version, right? You have all the the high-end features and then you have kind of the the base model, if you will. That that's kind of where that that range is coming from, but really as a next step, we'd like to, you know, kind of sit down and
084kind of go through exactly what you'd like to do. You know, as a company, we've done a lot of these nationwide. Um you know, not just these types of rooms, but additions, new builds, stuff like that. So um confident we could do whatever it is that exactly that you would want to do. Oops. So the parking lots for Fairview and for the high school, um for the high school, just looking at kind of that front portion right there. Um Fairview, obviously, you know, you have a lot of crumbling, a lot of potholes. And it sounds like that area is where the kids would have recess sometimes. Where the basketball hoops are. Um so we would really look to mill and overlay that area about an inch and a half to 3 in. So we would
085tear off inch and a half, 3 in of that and then pave over top of it. You know, redo the lines, etc. Um but they're confident both in both scenarios that the subbase is is very structurally sound, so wouldn't be anything further than that. Um so Fairview, you're 1.3-ish and then high school, you're 1.1. That's just for the the section in the picture there? In the picture there, yeah. Yeah, I think the total for the high school parking lot is about 200,000 sq ft if you did all the way around, including the driveways. Um so we were also asked about air conditioning for the high school. Um the biggest thing I can say for this, this can be done in stages. So, you know, if we sat down with you, you know, if we had
086a meeting to talk about some of the classrooms, right? Hey, here's how we want to build out some of the special ed or science, you know, whatever it might be, rooms. You know, at the same same time, we could say, "Okay, you know, what are the areas that you would like to see conditioned the most?" In which case, you know, we could take the air conditioning in phases. Um it wouldn't have to be a full um you know, $9 million. It can be something that's kind of phased in over the years, just depending on how you want to do it. Um engineers think it's about 106,000 sq ft that would need to be conditioned and that's roughly 73 unit vents um that would need to be replaced with DX uh heating and cooling units. And
087that would also include the bipolar ionization as well for indoor air quality. The biggest part of this, too, is if you're going to add air conditioning, you have to look at the electrical infrastructure. Um so the way the electrical is now, it would definitely require an upgrade in order to to manage the the bigger load. And again, I mean >> [clears throat] >> th- this is one option. Um if you look at the base of the slide, I put on here the geothermal and I'll I'll move quickly for the sake of time. Um have you guys explored geothermal in the past? So the geothermal might be a really interesting option because for a couple reasons. One, um the Inflation Reduction Act, uh you know, unlike solar, the Inflation Reduction Act for solar ends at basically
088[clears throat] the end of June, right? You have to be grandfathered in by July 3rd. For geothermal, there's an extension for that that goes on a couple years. The nice thing from a geothermal standpoint is you would still receive between a 30 and 50% check that goes towards the overall cost of the geothermal. So you know, we [clears throat] we have several clients. I actually have a case study here um coming up where um we we lowball estimated, "Hey, $2.5 million." The district ended up getting about 3.7. Um and that goes to offset the cost of it, but you have to keep in mind, too, you know, the benefit of the geothermal is you think about your, you know, typical HVAC units, your rooftop units, your chillers, whatever it might be. Um 15, [clears throat]
08920 years, right? That's the lifespan. 20 years, you really have to replace it, otherwise your car engine's at 350,000 mi and it just doesn't operate efficiently, right? The geothermal is really built to go out to 50 years, 40, 50, even 60 years with the um replacement of a heat exchanger, which is pretty inexpensive in comparison. So, you know, [clears throat] one way to look at it would be okay, we have the Inflation Reduction Act tax credits right now. We could take advantage of that and receive, let's call the lowball at 30%, you know, we get $300,000 check on a million-dollar geothermal project. Um but that, you know, and I'm not quoting the price, but that $700,000 is not just for a 20-year unit. That's going out for 40 or 50 years. So it's all on
090how you look at it. Um this school district here, Ida Public Schools, which is outside of Michigan, you could kind of see the projects we've done on the right. We've done a lot of the geothermal projects. This is the one I was referencing. Uh I was a little bit off. Um we had um more or less anticipated them receiving about 2.9 million in the IRA uh rebate. They received about 3.6. So again, you know, you're getting the IRA, you're you're getting the efficiency aspect of it and then you're getting the longevity of it, too. So that's something um you know, it's pretty easy to look into if that's on the table, but just to kind of bring that up. As we were preparing for this, that was something that they mentioned might be worth consideration.
091Um any questions on that, actually, before I And um so there's no death by PowerPoint. Um this is almost the end. Um but these are, you know, this slide I think is is one of the most significant slides and I don't want it to get overlooked because it is significant. Um we are guaranteed no change order on the selected scope of work. So if there is an issue with your geothermal or whatever the scope that you select might be, um we have to eat that cost. We have to rectify that at our own cost. We can't put that back on the district. There are so many districts that I've personally worked with in the past that have received, you know, some smaller schools 10, 20,000 here and there. Some medium-size schools that are three buildings,
092upwards of a million, if not over. So you know, it's it's not a scare tactic, it's a real thing. We would have to rectify the cost at our at our own expense and so that's one piece and then the single point of accountability, one throat to choke at the end of the day. We do the design, engineering, implementation, and commissioning. So, if there's any issue with any part of the project, we have to we have to manage that. We're not going to put it back on you. You don't have to project management. You'll have a project manager here, a site supervisor, depending on the size of the scope. So, um you know, ultimately, I'll say personally, you know, I believe in doing great projects. Um I want at the end of the day for you
093to say, "You know what? Um we would totally recommend VeraG." Uh that's my hope with this project from a personal standpoint. Um you know, we would be grateful for the opportunity. Mike, what's VeraG's role in the bidding process and advertising and >> Yeah. all those aspects? Yeah, so this is kind of our timeline here. It's a little bit hard to see with the lights. Um >> [clears throat] >> So, from a procurement standpoint, there's really there's a couple different ways. So, one, there's the traditional route of an RFQ, which is totally acceptable to VeraG. We're, you know, procured that way often. Um From a faster standpoint, when you're thinking about getting projects done this summer, um you know, there are two cooperative purchasing programs, Equalis and Sourcewell was brought up. We are on both of
094those. Um Both are great co-ops. Um the nice thing with that, our pricing is pre-bid. It's also audited, so you know, we can't we can't have 10 bad projects and still be on Equalis or Sourcewell. We have to have good projects. We have to be able to deliver and follow through on those things in order to stay on that. So, the goal with these, in my opinion, is it's really a safe safer route to go than the traditional RFQ route, where yeah, you might get you might get a super low bid. Um doesn't mean it's going to give you the best quality. So, it's kind of a trade-off between the two. Um From a timeline standpoint, um you know, we would want to get a letter of intent in front of you as, you know,
095as soon as possible, which really says, "Hey, we're going to procure VeraG to take, you know, the sewer and whatever other scopes and build that out." And then we would bring that in for mation back to you, and then it would be a notice, you know, not to exceed amount, contracts, etc. But again, whatever route that you wanted to go from a procurement standpoint is totally good with us. Any questions or concerns? Thanks for coming. Appreciate the >> Thank you for having me. Yeah. >> presentation. Appreciate it very much. Leave this up here. Are there any further questions or comments from the board? From the public? Seeing none, is there a motion to adjourn? Motion. Second. Thank you. Uh the next scheduled committee meeting is May 14th, 2026, which will be held on the secondary
096campus at 5:30. The regular board meeting will be held on May 21st, 2026 at 6:30. Meeting adjourned. Thank you. No, absolutely. It's been a pleasure.