ELY – School board members here received the results of a successful bond sale and reviewed enhanced concept designs for ISD 696’s $20 million facility renovation during a study session Monday night.
The recent voter-approved bond sale to help fund the project featured a lower-than-projected interest rate that looks to save district taxpayers more than $2.2 million in debt service tax levies, according to a senior member of the district’s financial advising firm.
Enhanced floor plan details of the new construction to link the campus buildings and a conceptual drawing of the exterior of the new building were also presented by the district’s architect.
A timeline for awarding construction bids over the winter could lead to a groundbreaking celebration next May, according to Superintendent Erik Erie. The project could be completed in time for the beginning of school in the fall of 2022.
Jodie Zesbaugh, senior municipal advisor for Ehlers, the school district’s public finance advisor, highlighted the impact of the bond sale.
“We received an interest rate significantly lower than projected,” she said. “We were thrilled to see those results.”
With the low interest rate district taxpayers will realize a “substantial reduction” in property tax levies over the 20-year duration of the loan. In addition, according to Zesbaugh, the successful bond sale allowed an increase to the project construction fund. She pointed to the district’s “excellent credit rating” in allowing for the successful bond sale.
Six bids were received for the bond sale, and the low bidder was Piper Sandler & Co., of Minneapolis.
“The True Interest Cost of 1.39 percent is substantially lower than the estimate of 3.25 percent used in our pre-election estimates,” Zesbaugh said. She noted that the original estimates were established in the spring just as the coronavirus pandemic was growing, creating much volatility in the markets.“As a result, the total debt service tax levies on the bonds will be approximately $2,280,000 less than our pre-election estimates.”
“The actual principal amount of the bond sale was reduced from $10 million to $9,945,000 as a result of a premium paid by the bidder,” she said.
The closing date on the bonds is scheduled for Oct. 15, and the district will receive the construction funds at that time.
Bond sale documents indicated a pre-election estimate of $9,861,442 available for construction costs. As a result of the premium bid received, net amount available for construction costs will be $10,140,174.
An updated analysis of the tax impact to district property owners shows an estimated tax increase of $53 per year for a homestead residential property with an estimated market value of $100,000. A commercial/industrial property with an estimated market value of $250,000 will see an annual property tax increase of $314.
“These results are very close to the estimates we provided in August, but they are lower,” Zesbaugh said. “We decided to pay as much principal as we could as quickly as possible to save on interest costs over the life of the bond issue.”
She also highlighted the ISD 696 rating report from Moody’s Investor Service. “In their rationale, they talk about your tax base, reserves, long-term debt, pension burden, and they mention your strong governance, particularly the district’s history of good budget management. They don’t say that very often. That was good for us and it was nice to see,” Zesbaugh said.
School levy
Due largely to the voter-approved bonding referendum, ISD 696 will collect more property taxes next year. At a special meeting last week, school board members approved a preliminary 2021 maximum property tax levy of $2,366,724, a 31.7-percent increase over last year.
The jump, from $1,797,063, is a result of the referendum approved by almost two-thirds of district voters in August.
Without the added referendum, the levy would have increased by 6.7 percent, according to district documents. The levy could decrease, but may not increase before final certification in December.
The 2019 levy of $1,811,459 accounted for about 21 percent of the district’s revenue of $8,694,165.
Facility design
Erie met last week with officials from Architectural Resources, Inc., and Kraus Anderson to review facility designs.
“We looked to get the two teams (architect and construction manager) to nail down timelines such as going for bids and getting designs completed,” he said. “We are dealing with a short timeline.”
ARI is pushing to deliver construction documents and have the design completed by the end of January, he said. After a call for bids and a three-week submission window, bid packages could be in hand by the third week of February. Construction bids would then be awarded.
Preliminary architectural drawings and a more detailed floor plan of the new building to be constructed between the Washington and Memorial buildings were released this week.
The facilities committee and principals were set to meet Friday to review the floor plans and give ARI additional feedback.
“They need to be getting into design development,” Erie said.
He said the facing surface of the new linking building (see illustration) is “true brick” in appearance but poured concrete in reality, with brick tile on the exterior.
“They are trying to honor the (traditional) building design,” he said.
More details were added to the new office spaces. District, Washington and Memorial offices will all be located to the right of the new secured entrance, and the media center will be located to the left of the entrance. The music department will feature glass on three sides facing the commons area. The industrial arts area, featuring separate woods and metals workshops, will be located on the south end of the new structure.
Erie noted that the renovations planned for the Memorial and Washington buildings will be part of a second phase of the renovation project.
“The designers are concentrating on the new construction phase, almost 39,000 square feet, to begin with,” he said. “They are keeping in mind the entire scope and total cost of the entire project. We promised our voters renovations in our other two buildings and to take care of the infrastructure, but we also promised them the basic concepts of this design.”