There was some great news and some not so great news when information on funding the rest of the school building project and the progress of the building project were made at the Monday night meeting of the Mount Ayr Community school board.
The good news came in a low interest rate for the $2,855,000 bonds the district will use to pay off the rest of the school building project from future sales tax revenues.
The not so good news was that the building project has been falling behind and remodeling of the current building needed as part of the project may be finished just in time instead of with some lead time for the new school year.
The building addition projects have also fallen further behind, the school board was told.
Infrastructure bonds sold
The school infrastructure bonds sold to pay the rest of the cost for the school building project, which will be paid for from one-cent state-wide sales tax funds over the next 20 years, were sold at the best interest rate of any school bond sale this year, according to Matt Gillespie from Piper Jaffray and Co., who presented the information to the board.
Five firms bid for the $2,885,000 in bonds which will provide $2,560,180.40 to the district for construction costs once bonding costs and a $263,730.75 debt service reserve fund are subtracted. The debt service fund eventually comes back to the district once the bonds are paid off. The lower than estimated interest rate will mean that the district will have $60,000 more in proceeds from the bond sale than first anticipated.
Royal Bank of Canada Capital Markets of Minneapolis, MN, was the low bidder, with a true interest rate of 4.54 percent.
Other bids (rounded off) included:
D. A. Davidson & Co., Denver, CO, 4.66 percent.
Northland Securities, Inc., Minneapolis, MN, 4.69 percent.
Piper Jaffray & Co., Minneapolis, MN, 4.74 percent.
Robert W. Baird & Co., Milwaukee, WI, 5.14 percent.
Gillespie said the maximum net interest cost over the 20 years would be $1,331,866.77, some $30,000 less than the second highest bid.
“We like to see the bidding as close as that,” Gillespie said, “and were very pleased at the final interest rate the bonds received.”
In comparison, the lowest bond sale for a school district this year was a 4.62 percent at Tri-Center and the highest sale this year was the 5.39 percent for Applington-Parkersburg.
The infrastructure bonds, backed by sales tax, came in at a rate not much higher than the 4.41 percent the general revenue bonds for the rest of the construction costs were sold for last year, Gillepie noted.
Gillespie presented the board with several charts showing the payment for the bonds with scenarios of enrollment figures and sales tax growth over the next 20 years.
The bonds are callable after 10 years and the district could pay off some of the bonds then and save interest costs, he noted.
The debt service reserve fund that is part of the funding mechanism is held by Banker’s Trust as trustee and interest will be paid on the fund while it is held. It is set up to provide insurance that payments can be made over the life of the bond.
The trustee takes a percentage of the principal and interest amounts coming due at six month or yearly intervals from the school accounts each month so that the payment if available to bond holders on time.
The school bonds were rated by Standard and Poores bond rating service and received an A rating, Gillespie noted.
The board approved a resolution directing the sale of the bonds to the low bidder at the meeting.
At the board’s April 10 meeting, various bond issuance resolutions and paperwork will be passed and the transaction will close and bond proceeds will be delivered to the district’s bank account on Tuesday, Sept. 1, Gillespie told the board.
The district will make its first payments on the bonds on July 1, 2010. Interest payments are made twice a year and principal payments made once a year on the bonds after that.
Mark Sabers and Steve Bennett from Construction Services Inc. reported on the progress of the building projects, noting that two weeks had been lost on the remodeling portion of the current building and on the high school building work.
It had been planned that the remodeled portion of the current building would be ready for use on August 8 but that has been pushed back to August 18 or so.
The demolition work on the areas of the present elementary school to be remodeled started again on July 1, it was noted. The work had come to a halt on June 16 because of concerns with the school’s insurance policies and coverage which have since been resolved.
The demolition work should be completed shortly and overhead mechanical, plumbing and electrical work is in progress. New interior walls will be framed, drywall installed and finish work started by the end of the month.
It is CSI’s intent to install all finish items in the remodeled kindergarten/administration area except carpet installation in the corridor, which will be done when the addition is being carpeted to reduce the wear and tear at the point where the remodeling meets the new addition.
During the month of June, elementary school building progress was hampered for several reasons. Weather and foundation modifications had an adverse impact on masonry contractors ability to stay productive.
The foundation modifications are complete, the recent weather has improved and progress has picked up, Sabers reported.
Geothermal well drilling is nearing completion. Masonry wall construction will continue and will be completed during the month of July with the exception of the wall that allows access for the crane.
At the high school, significant progress was made with the slab on grade for the entire building poured. Roofing was installed over the low roof areas and overhead sprinkler, mechanical, plumbing and electrical work started.
The wall opening at the north side of the gym will be filled with precast concrete panels when the crane returns to erect the balance of the walls and steel for the elementary school.
The exterior walls of the high school addition will be painted during the month of July and interior wall framing, door frame installation and miscellaneous canopy framing will be completed during July.
Substantial completion date for the high school addition is set for October 30 and substantial completion date for the elementary school is set for December 9 currently.
Steve Bennett noted that the district needs to get the bidding done for demolition of the 1936 building as this is the one portion of the project that has not yet been finished.
“We need to get the bids so we don’t get any big surprises down the road,” he noted.
This item has been held off on until closer to when the work would actually be accomplished.
At the meeting the board approved the latest payment on the project of $672,880.70 and a change order of $3,299 for adding six inches to the depth of footings for the precast walls at the high school.