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School bonds issued at lower interest rate PDF Print E-mail
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Written by JOE POIRIER   
Wednesday, 31 May 2017 16:56

 

Patience pays off as district borrows $29.9 million for school facilities project at lower rate than expected

    Timing was everything for the Grafton School Board, which approved its first phase of financing for most of the $39.9 million referendum last week.
    The district issued $29.9 million in bonds on Wednesday, May 24, at an interest rate of 3.05%, significantly lower than the 4.5% that was projected prior to the referendum vote in April.
    “We have not seen rates this low since before the election. We’re very happy with these results,” said the district’s financial advisor, Michael Clark, who works for Baird. “It’s great news. The district is in a great spot. There’s a lot of flexibility going into this fall, which was an issue of concern based on where the overall tax rate was going.”
    Instead of paying $23.3 million in interest over the 20 years of the financing plan, the district will pay $17 million — $6.3 million less than expected.
    That means district residents will pay less than anticipated to finance the school projects. Initially, the district estimated that the portion of the tax rate attributable to the referendum borrowing would increase 66 cents per $1,000 of equalized value to finance the first phase of borrowing — an increase that would have cost the owner of a $200,000 home $132 more in school taxes next year.
    Under the revised financing plan, however, the referendum’s tax rate is expected to increase 41 cents per $1,000 of equalized value, which would cost the owner of a $200,000 home $82 more in school taxes.
    The amount of state aid the district will lose because of proceeds from the borrowing is also part of the equation. The district was initially projected to lose $6.6 million in aid next year. Under the new financing plan, however, it is projected to lose $4.4 million.
    “We’re spending less money. When you’re spending less money, the less state aid goes out,” Topher Adams, the district’s business services director, said.
    The district plans to borrow the remaining $10 million next year.
    The remaining principal from the 2000 referendum is $3.9 million. The last payment on this debt will be in 2021.
    The district will begin accepting bids from contractors in August and plans to select a construction company in September.
    Construction of the new additions to Woodview and Kennedy elementary schools is set to begin in September and be completed by June 2018.
    Grafton Elementary School will be razed in August 2018 after the construction at Kennedy and Woodview elementary schools is complete.
    At Grafton High School, construction will begin in September and will be completed by August 2018.
    The high school’s renovations include updates to its science facilities and career and technical education spaces.
    A gym with seating for 250 people will be added to the high school, after Grafton Elementary School’s gym is removed.
    The $39.9 referendum was passed by voters in April after last spring’s $47.7 million referendum and $1.8 million plan to upgrade athletic facilities failed to pass.

 
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