2021-22 debt service could drop almost 30 cents due to interest rate on $12.9 million construction project
BY CHUCK VANDENBERG
DONNELLSON – The COVID-19 virus has thrown a wrench in the socioeconomic netting of Lee County, but it’s impact on global interest rates may have just saved Central Lee taxpayers some cash.
According to Central Lee Superintendent Dr. Andy Crozier, bids on the district’s $12.9 million construction project slated to begin this month came in very favorable to the district.
He said it’s the first time he’s ever done a general obligation bond, and didn’t know the impact of the virus on this particular project.
“We set this out for bid before COVID-19 went crazy, but bidders don’t bid til the deadline, which was Monday at 10 a.m.,” Crozier said. “The turmoil of the market helped with the bond bids for sure. At this point, we did very well.
Interest rates fluctuate through the life the 20-year bond, but at the outset, Crozier said the net interest rate is 2.53%
Crozier said that’s a huge win for the district. When the bond was presented to voters, the district calculated a $2.70/$1,000 of assessed valuation price tag for district taxpayers per year. With the district’s valuation increasing about 9%, the debt service rate on the bond dropped to $2.60 for 2020-21, but Crozier said next year that rate could drop to as low as $2.42 in the 2021-22 fiscal year budget.
“So basically, we’ve already taken close to 30 cents off the general bond,” he said.
Another plus for the district was what he called an upfront premium that is paid on top of the $12.9 million for the project to entice a slightly higher interest rate, which allows investors to make a little money more over the term of the bond.
That premium amounted to $874,000 taking the total funding available for the project now to $13.5 million. Crozier said that money can only be used on the project and can’t be transferred anywhere else in the district budget.
“That took care of the underwriting costs, insurance costs and our attorney’s costs on the bond, which was about $250,000. So that leaves roughly $600,000 that we can use toward the project,” he said.
What the district does with that money probably won’t be determined until the original construction project is close to completion.
“We’ll have to get together and talk about what we can add. Most likely we’ll try to get through most of the construction before adding things, in case of overruns. These times call for more conservative protocols,” Crozier said.
In addition to increased security measures including a new high school office, funds will be used for new classrooms for music programs, along with new preschool classrooms that will free up two additional classrooms to meet space needs at the elementary level. There would also be a new competition and performance gym for elementary, middle, and high school events, and ADA-accessible locker rooms. Additional plans call for an expanded commons area for better student collaboration and improved building flow.
Construction was set to begin on April 27, but Crozier said he’s informed the construction management firm to begin work as soon as possible, with a completion date of next summer expected on most of the work.
Crozier said he doesn’t see the coronavirus outbreak as slowing the work down.
“A lot of work up front is excavating and concrete and you can do that within the social distancing guidelines. Most of those people are in large machinery so that work can begin and I don’t see any delays,” he said.
Steel work isn’t expected until July and Crozier is hopeful that the pandemic is behind us at that point.
He said he fully expects Governor Kim Reynolds to suspend school through the month of April in accordance with President Donald Trump’s extension of social distancing for the same time frame.
“Parents can look at the administration and say, ‘How do we send our kids to school?’,” Crozier said. “It’s only a matter of time, and I’m not criticizing the Governor, it can be challenging making those decisions if your getting different messages.”
Crozier said he would advocate for a continuance of school in May if it’s safe.
“We would gladly welcome them back whether only through May or a week or two in June,” he said. “Obviously we feel the learning is very important and some kids are continuing to learn through resources we’ve provided.”
But Crozier also said he feels bad for the students who might miss out on things like prom, spring sports and even graduation.
“School offers so much more than classroom instruction. Prom, graduation, spring sports, there’s so much more than instruction. They’re losing all that and that’s unfortunate and I feel really sad for them,” he said. “If we can come back, and its safe to do so, and they can experience that, I would be supportive in making that happen.”
Crozier said he’s been very impressed with the commitment of the various school employees who’ve continued to work making sure the district stays as functional as possible through the crisis.
“I just want to commend all the various employees that have been coming to work to maintain essential services. Bus drivers have been delivering meals and nutrition staff has been in making breakfasts and lunch and those numbers are growing daily,” he said.
“Secretaries and principals and non-certified have been here to make sure kids can get ipads and continue to learn. No one was required to do that and they all stepped up.”