School district to save millions through break on interest rates

It's a case of perfect timing for the Brainerd School District and a move that will save taxpayers nearly $5 million - $425,000 annually through 2023.

School board members, in a special meeting Friday, authorized the refinancing of the 2002 bonds for building Forestview Middle School, funded remodeling at Brainerd High School and the South Campus, as well as technology upgrades in the district. The original bonds were $59.9 million and the balance, which will be refinanced, is $49.97 million.

Steve Lund, director of business services, as well as the district's financial advisers, Ehlers and Associates, had been keeping an eye on the favorable financial market rates and strategically chose a mid-week sale date on Feb. 10 for the 2002 bonds. Lund said he was pleasantly surprised when the district received lower interest rates than anticipated.

Kristin Hanson of Ehlers and Associates said the district had 10 competitive bidders. The board accepted the lowest bid from CitiGroup for 3-4 percent interest on the new bonds, compared with the current 5-5.375 percent on the 2002 bonds. This will produce an average savings of $425,000 annually on the school district's levy, starting with the 2012 levy that is certified by the board in December of 2011. The $425,000 savings reflects a 2.7 percent reduction in the school levy and a total savings of $4.7 million, said Lund.

Lund said taxpayers should see a decrease on their school taxes, starting in 2012, of about $6-$8 per $100,000 market value for a residential or commercial property in the district.

"It was an excellent time to bring the district to market and you have excellent results," Hanson told the board Friday. "This is the most savings we've seen since January 2005."

JODIE TWEED may be reached at jodie.tweed@brainerddispatch.com or 855-5858.