Archive for Wednesday, December 1, 2004

Financial consultant outlines sale of bonds

December 1, 2004

Next spring, area residents will get the first crack at buying bonds for school construction.

In November, voters approved a $25.3 million bond issue for school construction. The bond issue will:

  • Build a new middle school for fifth- through eighth-graders on 80 acres near Pleasant and Washington streets.
  • Remodel and add to the existing elementary school to convert it to a school for kindergartners through fourth-graders.
  • Remodel and revamp the high school and junior high into a campus for freshmen through seniors.

Last week, Roger Edgar, bond consultant with George K. Baum and Co., talked to school board members about how bonds to finance the project will be sold.

Tonganoxie school Superintendent Richard Erickson said he wanted to ensure that local residents have an opportunity to buy the bonds, which will be sold in increments of $5,000.

Although the minimum purchase is $5,000, Edgar said bond investors usually tend to invest $10,000 or more.

"The interest rates will probably range anywhere from 2 percent to 4 percent or maybe a little less than 5 percent," Edgar said. "The bonds could mature anywhere from two years to 25 years."

The 4.5 percent might not seem very high, Edgar said.

"Most people would say that's not very much return for tying your money up for 25 years," Edgar said. "... You do get your money back with interest, that's the main thing."

And, board member Darlyn Hansen added, the interest on the bonds is exempt from federal and state taxes.

While the board discussed the purchase of the bonds, one board member, Bob DeHoff, asked Edgar when tax increases for projects would be reflected in property tax statements.

"That will be on the tax statements that come out a year from now," Edgar said.

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