REGIONAL – Taxpayers will reap even greater benefits than anticipated as a result of the St. Louis County School District’s decision to refinance $9.52 million in general obligation bonds used to …
REGIONAL – Taxpayers will reap even greater benefits than anticipated as a result of the St. Louis County School District’s decision to refinance $9.52 million in general obligation bonds used to support the construction of new schools and remodeling of others.
Greg Crowe, senior municipal adviser for Ehlers, told the board on Monday that interest rates are lower than expected when the pre-sale report for the bond refinancing was prepared in February.
That translates into greater savings for taxpayers, reducing the debt service payments by $1.527 million compared with the original estimate of $1.266 million. Crowe said it represents a savings percentage of nearly 12 percent. Typically, he said, a good savings percentage would be between five to seven percent.
“That’s good news for our taxpayers,” said board member Troy Swanson.
“It’s great news,” added Business Manager Kim Johnson.
The impact will be felt almost immediately by taxpayers, who will see a reduction in property taxes beginning in 2017-18.
Savings over the next 10 years would average about $150,000 annually, Crowe said. The greatest savings — $181,856 — would occur in 2017.
Six different firms bid on the right to refinance the bonds with the Milwaukee-based BAIRD winning the bid with a true interest rate of 2.0194 percent. The highest bid was submitted by Piper Jaffray & Co., with a true interest rate of 2.2459 percent.
The savings from refinancing bonds follows on the heels of tax relief already approved by the Iron Range Resources and Rehabilitation Board.
In early February, the board gave unanimous approval to a resolution that will provide $2 million annually to help cover a portion of the district’s bonding costs over the remaining 12 years of the bonds.
The district currently pays about $5.2 million per year on its bonding, so the funds approved in February will trim that by roughly 40 percent.
The IRRRB payments will come from a fund established in 2014 to help support moves towards school consolidation and cooperation in the taconite relief area. The original laws had made funding proposals retroactive to 2006, which allowed the St. Louis County and Mesabi East school districts to qualify for the aid, since both had undergone significant school consolidations in recent years.
About two-thirds of the funding comes from the taconite production tax, while the remaining money comes from the occupation tax paid by area mines.
Board members plan to have Ehlers prepare a tax table that they can use to show how the savings will affect individual taxpayers.