Kenton County School Board approves $25.7M bond for new admin office

The Kenton County Board of Education voted to issue nearly $25.7 million in bonds on Monday to finance the construction of a new central office building along Madison Pike. The building will also serve as a virtual learning center and as an event and meeting space.

The building cleared a facility review from the Kenton County Planning Commission in January. The 8.7-acre parcel of land it sits upon is located at the intersection of Madison Pike and Tuscany View Drive in Covington, near the borders of Fort Wright and Taylor Mill.

The City of Covington also approved a jobs-creation development incentive for the facility in December. Statements from the city’s economic development staff indicate the city expects the district to bring in 75 jobs to Covington, with an average salary of about $85,000.

The building will serve primarily as the district’s central administrative office. It will also have a dedicated classroom for virtual learning as well as meeting space for events and training. The facility will have about 200 parking spaces.

The design has changed little since the planning commission cleared it, said Chief Operations Officer Matt Rigg. Rigg added that it was good to get the project moving–construction is already underway.

“It just it took so long, it felt like,” Rigg said. “I mean, it didn’t take any longer than normal, just a lot of excitement to get that building up and going.”

Rigg said the district hopes to finish the building by the end of 2025 and be ready to move in before the start of the subsequent school year.

The district’s administrative staff and school board currently operate out of office space at the Sanitation District 1 office in Fort Wright, a space they’ve used for nearly 20 years. It’s where they cast the vote to issue the bonds.

The financing for the project will come from a new kind of general obligation bond approved by the Kentucky General Assembly in April, which allows districts to issue bonds directly, rather than through a separate finance corporation.

“We do believe we are the first district in Kentucky to take advantage of the new opportunity with general obligation bonds,” Superintendent Henry Webb said.

Here’s how they work: The district solicits investors to buy bonds, in this case about $25.7 million worth, which will provide the district with cash to finance the building’s construction. The district is then fully on the hook to pay back the principal of that debt plus any interest.

In a scenario where the project fails to generate revenue for the repayments, the district would have to make up the money some other way. In some cases, this might entail investors inducing the board to raise local property taxes. As such, the bonds resemble similar funding measures employed by cities and counties to finance capital projects.

This is in contrast to an earlier and more commonly used form of school financing called lease-revenue bonds. With lease-revenue bonds, the debt is taken on not by the school board itself but by a separate school finance corporation.

These corporations have the same legal status as any corporation in the commonwealth, even though the people on the corporation are often the same members of the school board.

Ludlow Independent Schools issued these kinds of bonds in August of last year to partially finance renovations throughout the district, for instance. If the finance corporation defaults on a lease-revenue bond payment, the state can withhold SEEK funding from the district to make the repayment.

Many investors consider general obligation bonds as more secure than lease-revenue bonds, especially for larger districts like Kenton County, which have solid tax bases. As a result, borrowers (i.e. the school boards) are often able to get lower interest rates with general bonds than with lease-revenue bonds. The interest rates for the bonds issued on Monday have not yet been set.

Webb stated on Monday that the new funding measure will likely save the district about $500,000 compared to older forms of school financing instruments. If the district is able to secure a 15-year payback period, rather than the more conventional 20-year payback period, that could save the district about $2 million more, Webb said, a figure members of the board found encouraging.

School Board Chair Jesica Jehn said it was a good thing “anytime that we can save about two and a half million dollars.”

Click here to access preliminary design documents furnished by Emboss, the district’s design contractor, as of January. You can also view 3D renderings of the building below.