S/T School Board To Use Surplus Bond Proceeds To Decrease Outstanding Bonds

Michael LaVallee of Stone and Youngberg were on hand to explain the three options available to the board. He noted that the district has common bonds from two bond issues in 2004 and 2009, which were approved by voters in 2003 and 2008, respectively.

LaVallee then explained each scenario, with the tax rates based on $100 of assessed valuation. “If you have growth in assessed value, the tax rate will go down; if you have a decline, the assessed value tax rate will go up,” he said.

The first scenario would pay early and up front. The 2012 secondary bond tax rate is 76 cents. Under this option, in 2013 it would decrease by 22 cents, and in 2014 and 2015 by 23 cents, but in 2016 it would go up to 85 cents.

The second scenario would pay off debt out long, pay off fewer principal amounts, but pay off interest over a 12-year period. It would decrease the secondary bond tax rate by three cents each year from 2013 to 2022. The last two years, 2023 and 2024, would have impacts of 31 cents and 36 cents, respectively. “But because paying off bonds out longer you have negative arbitrage, you actually could earn up to $85,000,” LaVallee said.

The third scenario is pro-rated, paying off pro-rated debt service over the series life of the bonds. It would pay off about $75,000 a year, which would lower the bond rate about seven cents a year.

“All three scenarios are taking $842,000 and are paying off debt, with the first paying off $835,500, the second paying off over a million dollars and the third paying off $936,000,” said LaVallee.

After the board discussed the options, a motion to approve the transfer surplus bond proceeds to decrease outstanding school improvement bonds of the district with scenario two, paying back money at the end of the bond, passed unanimously.