School bond sale results in taxpayer savings
February 14, 2023 (Hawley, MN) Taxpayers in the Hawley Public School District will pay about $8.4 million less than originally projected for a new middle school and upgrades to the high school approved by voters last year. The savings are due to a better than anticipated bond sale in January that allowed the district to raise the $53 million needed for the project but pay the bonds off in a shorter period of time.
Term of bond shortened by two years, tax impact decreases
Baird Public Finance, the district’s underwriter, finalized the pricing of the $52,950,000 bond issuance on Thursday January 7, 2023. The true interest cost (like a home mortgage interest rate) came in at 4.23%, 0.64% lower than the 4.87% rate originally structured at the time of referendum planning.
Because of the favorable bond structure, the term of the bond was reduced from 25 years to 23 years, realizing an overall tax savings of $8.4 million due to two fewer years of bond repayment.
“We are very excited to save money for our taxpayers,” said Hawley Superintendent Phil Jensen. “Hawley students and the overall community will benefit greatly from the investment in school facilities. We are grateful for our voters' support, and we’re very happy to provide some return to taxpayers right away.”
$1.7 million placed in contingency
The bond sale also yielded a significantly higher premium than forecast, $1.7 million, allowing the district to deposit more in the construction fund than what taxpayers will pay. According to Baird, bond holders purchased the $53 million bond for more than its principal amount because of a favorable interest rate. These funds are dedicated to the facility project, and can’t be used for any other purpose.
Jensen says the additional amount will be placed in a contingency fund to help with any cost overruns due to unforeseen building expense increases caused by inflation or other issues.
The district also stands to benefit from some investment interest on bond funds prior to when they are spent on construction. Jensen noted the district is currently working with three vendors on finding the best investment options for the district.
The district received the proceeds on February 7, 2023 and will move forward with investing the proceeds from the bonds based on the construction draw schedule provided by InGensa, the facilities project manager.
For more information
Visit www.gohawley.org for more information about Hawley Schools facility improvement updates
February 14, 2023 (Hawley, MN) Taxpayers in the Hawley Public School District will pay about $8.4 million less than originally projected for a new middle school and upgrades to the high school approved by voters last year. The savings are due to a better than anticipated bond sale in January that allowed the district to raise the $53 million needed for the project but pay the bonds off in a shorter period of time.
Term of bond shortened by two years, tax impact decreases
Baird Public Finance, the district’s underwriter, finalized the pricing of the $52,950,000 bond issuance on Thursday January 7, 2023. The true interest cost (like a home mortgage interest rate) came in at 4.23%, 0.64% lower than the 4.87% rate originally structured at the time of referendum planning.
Because of the favorable bond structure, the term of the bond was reduced from 25 years to 23 years, realizing an overall tax savings of $8.4 million due to two fewer years of bond repayment.
“We are very excited to save money for our taxpayers,” said Hawley Superintendent Phil Jensen. “Hawley students and the overall community will benefit greatly from the investment in school facilities. We are grateful for our voters' support, and we’re very happy to provide some return to taxpayers right away.”
$1.7 million placed in contingency
The bond sale also yielded a significantly higher premium than forecast, $1.7 million, allowing the district to deposit more in the construction fund than what taxpayers will pay. According to Baird, bond holders purchased the $53 million bond for more than its principal amount because of a favorable interest rate. These funds are dedicated to the facility project, and can’t be used for any other purpose.
Jensen says the additional amount will be placed in a contingency fund to help with any cost overruns due to unforeseen building expense increases caused by inflation or other issues.
The district also stands to benefit from some investment interest on bond funds prior to when they are spent on construction. Jensen noted the district is currently working with three vendors on finding the best investment options for the district.
The district received the proceeds on February 7, 2023 and will move forward with investing the proceeds from the bonds based on the construction draw schedule provided by InGensa, the facilities project manager.
For more information
Visit www.gohawley.org for more information about Hawley Schools facility improvement updates