Scott Williams, swilliams@wolfrivermedia.com
Paying off the Shawano Community Middle School project will cost taxpayers $2.5 million less that originally forecast, thanks to low interest rates.
Shawano School District officials have secured a favorable interest rate of slightly more than 2 percent while borrowing $9.25 million in the bond market for the voter-approved middle school renovation.
Officials last fall had projected interest rates as high as 4 percent when presenting the project’s potential cost to voters before a district-wide referendum Nov. 3 on whether to borrow the money.
Voters passed the referendum by nearly a 2-to-1 margin on the assumption that the ultimate cost, with interest, could total $14 million.
With the lower interest rate, officials say the total cost will be about $11.5 million.
Louise Fischer, the district’s business manager, said the school district secured the more favorable terms by going to the bond market on Monday at a time when interest rates were momentarily in decline.
“We picked the perfect time,” Fischer said.
Members of the Shawano School Board voted unanimously earlier this week to approve the bond issue, in which Milwaukee-based BOSC Inc. underbid five other firms offering slightly higher interest rates.
Board President Tyler Schmidt said he credits the district’s staff and financial advisers with delivering savings to taxpayers on the middle school project.
“We hit the bond market at just the right time,” Schmidt said. “It’s always good to have that kind of news.”
The proceeds will be used for a major upgrade of the middle school, including improvements to the heating system, cafeteria, locker rooms, kitchen, band and orchestra rooms, and more. Since voters approved the project Nov. 3, district officials have been considering borrowing options with financial advisers at PMA Securities Inc.
Another factor in securing the low interest rate was the district’s decision to issue a 15-year bond rather than a 20-year bond, meaning that the project will be paid off five years sooner.
According to figures provided by the district, yearly debt payments will range from about $330,000 to $1.1 million. Property tax increases for the owner of a $100,000 home will fluctuate between $21 and $83 a year, averaging $51.
Fischer said the accelerated borrowing strategy means that the school district will be debt-free by the year 2031.
“That is huge,” she said.