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Local News

June 11, 2019 - 10:48 AM

Steve Shogren with George K. Baum & Company. FILE

An unexpected low bond rate will save USD 257 taxpayers about $8.6 million in interest to build a new elementary school and make other improvements.

School board members learned the results from the sale of $35.3 million in bonds Monday, after taxpayers voted in April to build a new elementary school for $25.5 million, a new science and technology building at the high school for $7 million and replacing heating, ventilation and cooling systems at the middle school for $2.8 million.

The winning bid came from Robert W. Baird & Co., Inc., which offered a total interest rate of 3.09456% over the lifetime of the 30-year bonds.

“We’ve never had rates like this on 30-year bonds,” Steve Shogren, senior vice president with George K. Baum & Company, told the board. “We caught a downdraft in the market.”

Shogren attributed the favorable interest rate to economic uncertainty regarding U.S. trade talks with Mexico and China. There’s also speculation the Federal Reserve will cut interest rates further.

In May, when the school bond project was first let for bids, interest rates were about 3.75 percent.

“Wow, did we ever hit this timing right,” Dan Willis, school board president, said. “We are very grateful taxpayers will be seeing an unexpected break.”

Supporters of the school project, with help from Shogren, initially estimated the entire project would cost the owner of a $70,000 house about $14.57 more each month in property taxes. That was based partly on an estimated interest rate of 4.50 percent.

But with the actual interest rate coming in significantly lower, the owner of a $70,000 house now can expect to pay about $12.67 per month. The tax rate (mill levy) is expected to average about 18.89 mills; the previous estimate called for an increase of 21.72 mills.

“For perspective, that savings is greater than the cost for HVAC upgrades at the middle school,” Willis said.  

The bid from Baird also paid a premium of $1,132,872. Of that, $1 million will be retained for a contingency fund to cover unexpected costs. The rest was used to immediately reduce the debt. Any of the contingency not used for the project can be used to help pay the debt later.  

The district is expected to close on the bonds June 27. Money will be invested in a state pool, earning interest until it’s needed to pay for various aspects of the project.

Construction is expected to begin next summer for the HVAC at the middle school. The new science/technology building at the high school is expected to open in the fall of 2020. The new elementary school is expected to open in the fall of 2021.

The district has reached agreements with all four property owners near the high school. Houses on the lots will be razed for the new science and technology building. The district offered to relocate the houses, Willis said, but the property owners chose to sell instead. The district previously acquired other lots near the site, as well.

 

Absenteeism

Iola High School students can expect to be more accountable next year when it comes to absences, Principal Scott Crenshaw told the board. 

A review of student absences last year shows more than 10 percent of all IHS students are “chronically absent.”

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