State would pay 30 percent of district’s bond payments
Along with talk about possible school construction comes talk of financing.
As plans stand now, voters will be asked in November to approve a $25.6 million bond issue.
But currently, the state pays 30 percent of new school construction.
Why, then, doesn't the district float a bond issue that's 30 percent less -- say, $17.7 million?
Roger Edgar, a financial consultant with the George K. Baum Company, said that's because the state doesn't pay construction costs.
"The state pays, or funds a portion of your bond payments," Edgar said. "So the district has to fully fund the project and the state's program will pay 30 percent (or $7.9 million) of the annual bond payments."
In the mill levy projections, the 30 percent reduction already has been factored in, Edgar said.
"If voters approve the $25.6 million bond issue, the state will pay 30 percent of the payments on that bond, and district taxpayers would be levied, or paying 70 percent on that bond," Edgar said.
Or, as DLR Group architect Jim French said at Thursday night's community forum, "In general, if you look at that $7.9 million, it's almost as if this district is getting a new elementary school paid for by the state of Kansas."
In addition to state assistance on repaying the bond, the state will give the district about $386,000 for each of the first two years after it moves into new buildings to take care of additional costs.
Edgar also talked about how long the district should take in paying off the bond.
If the school board votes to hold a November bond election, and if voters approve it, the best choice would be to use bonds that would be repaid over 20 or 25 years, Edgar said.
Assuming that the new bonds would sell at an average interest rate of 5 percent for a 20-year issue or 5.10 percent of a 25-year issue, the district's total payment would vary. If structured over 20 years, the total payment would be $42.8 million. If structured over 25 years, the total payment would be $47.7 million.
A 20-year structure would require a mill levy of 18.280 for the new construction.
A 25-year issue would require a mill levy of 16.236 for new construction.
The district currently is completing payments of 3.470 mills on a prior debt that will be paid off in 2007.
A mill is $1 in taxation for every $1,000 in property valuation.
For the owner of a $100,000 home, a 20-year bond for $25.6 million would translate to $250.13 annually in property taxes. On a $200,000 home, the taxation would be $500.25.