Referendum interest rates come in lower than expected

Borrowing costs for the Grafton School District’s $39.9 million referendum are less than expected for taxpayers after the second round of bonds were issued last month following a special School Board meeting Feb. 28.

The referendum, which was approved by voters last April, calls for the demolition of Grafton Elementary School and expansion and upgrading of Grafton High School and Woodview and Kennedy elementary schools.

The second round of borrowing for the remaining $10 million was approved by the board.

The district received seven bids for bonding, and the board accepted the lowest bid offering a 3.15% interest rate.

The first debt issuance for $29.9 million was approved last summer with a 3.05% interest rate.

Topher Adams, the district’s business director, said the district initially expected interest rates between 4% and 4.5%.

That means district residents will pay less than anticipated to finance the school projects. Initially, the district estimated that the tax rate would increase 66 cents per $1,000 of equalized value to finance the 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, the tax rate is expected to increase 40 cents per $1,000 of equalized value, which would cost the owner of a $200,000 home $80 more in school taxes.

During its special meeting, the board received a presentation on the bond financing from its financial adviser, Robert W. Baird Co., which said the interest rates will cost a projected $16.78 million. Last

March, the projection was $23.3 million, which means the district will lose less state aid than originally expected.

The school district initially projected it would lose $5.3 million.

According to Baird, the 40-cent tax-rate  increase uses an assumption of 2% growth of property value for each of the next three years, and 1% of annual growth afterward.

According to Moody’s Investors Service,  a bond credit rating business, the district has averaged 3.1% growth over the last five years.

The school district has an Aa2 rating from Moody’s, which is the third-highest attainable.

The remaining principal from the 2000 referendum is $3.9 million. The last payment on that debt will be in 2021.