Lower interest rates mean lower tax burden for MPS bond

MARSHALL — Favorable interest rates will make a difference for taxpayers as Marshall Public Schools bonds for a major building project, school board members learned Tuesday.

“Interest rates have declined quite a bit in the past few months,” said Jodie Zesbaugh, a financial adviser with Ehlers, Inc. “So the total tax levies on the bonds are $5,382,000 less than what we had in the pre-election estimates.

“That is all a savings to your taxpayers, and we are really happy to see that result,” she said.

In a report to the school board, Zesbaugh said the difference would mean smaller tax increases than predicted for local property owners.

“On a $150,000 home, instead of $72 annually, we’re at $57 for the upcoming year,” she said. That would translate to a property tax increase of $5 a month, instead of $6 a month.

In May, Marshall voters approved a $29.8 million building referendum, that will replace West Side Elementary with a new school building near Marshall Middle School, as well as updating other public school buildings. Some of the projects covered in the referendum include construction of a three-classroom addition for early childhood education at Park Side Elementary, and safety and security updates at Marshall schools.

The sale day for the building bonds was June 20.

“We have excellent results to report,” Zesbaugh said. “We got eight bids on the day of sale. We like to see at least three, so we were very excited to have that much interest in your bonds.”

In the low bid for the building bonds, from Minneapolis-based Piper Jaffray, the interest rate was around 2.83%, Zesbaugh said. That was a rate significantly lower than the 4.05% estimate used before the building referendum, and lower than the 3.1% estimate included in Ehlers’ pre-sale report in June.

The bid from Piper Jaffray had a net premium that was higher than estimated before the referendum, so the actual bond amount was for $28.735 million, instead of $29.8 million.

“With the bid that you received, and the premium that was authorized, we are actually showing now a little over $30 million available for project costs. So that’s nice, to have a little bit more cushion for your project,” Zesbaugh said.

With the new building bonds on top of existing debt, estimated tax rates for the Marshall school district are projected to increase for four years, from 2020 through 2023, Zesbaugh said. After that, estimated tax rates will take a step down for three years, and then decrease again and level out starting in 2027.

Preparations for the building projects are already underway. At Tuesday’s board meeting, MPS director of business services Dion Caron said a meeting is planned next week to discuss traffic concerns for the new school building. Caron said representatives from the school district, the city of Marshall, Marshall Police and school bus companies would all be taking part in the discussion.

At Tuesday’s meeting, board members also voted to sell a portable classroom at Park Side Elementary to make way for future construction.

“We know we’re going to need that space,” Marshall superintendent Scott Monson said, and it would be easier to move the classroom out now than to wait until next spring.