District to offset cost of two building additions by refinancing long-term debt
December 19, 2013
The Moorhead School Board voted Dec. 9 to refinance some of the district’s long-term debt, saving approximately $3 million in interest payments over seven years.
The board approved the presale of general obligation school building refunding bonds and is expected to award the sale of the bonds at the Jan. 13 board meeting.
Interest rates on the district’s existing bonds are 4% to 4.25%. The district’s financial advisor, Ehlers and Associates, estimates that based on current market conditions the new bonds will have rates between 0.55% and 2.80%. This will reduce the district’s debt payments approximately $434,000 per year from 2016 through 2022, said Assistant Superintendent Wayne Kazmierczak.
According to Kazmierczak, the reduction in annual payments for that seven-year period helps offset an increased lease levy, which the district is using to help pay for additions to two schools.
In November, the School Board approved nine facilities recommendations, including additions at Robert Asp Elementary and Probstfield Center for Education, with construction to begin in the spring of 2014 for both projects.
The 11,000-square-foot Robert Asp addition is estimated to cost $2.2 million, which will be paid using the lease levy, and will address a critical shortage of physical education space at Robert Asp Elementary and provide for more equitable elementary school facilities.
The Probstfield Center 20,100-square-foot addition will include eight classrooms and a gymnasium to address the need for elementary classrooms beginning with the 2014-15 school year and gymnasium space issues. It will cost approximately $4.3 million and will be paid for using the district’s lease levy and existing district funds.
Using lease levy financing of about $5 million to pay for these additions will have a tax impact of $26 per year on a $200,000 home. The district’s payments would be approximately $460,000 a year, Kazmierczak said.
With the refinancing, the lease levy payments will be offset by the anticipated $434,000 reduction in the annual debt payments from 2016 through 2022.
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