GIBBON — After brief discussion Monday, the Gibbon Fairfax Winthrop (GFW) School Board unanimously approved a property tax abatement resolution to free up funding for utility bonding with the city of Gibbon.

The property tax abatement not to exceed $2.9 million over 15 years can only be used for parking lot improvements that would enable school district residents to safely and conveniently access the new preK-12 school site on the east end of Gibbon.

“This allows the school district to move money dedicated for the parking lot to pay off water and sewer bond the city of Gibbon issued to bring water and sewer services to the new school,” said GFW Superintendent Dr. Kelly Smith.

He said the school district is currently obligated to pay back the city of Gibbon about $130,000 a year for 20 years.

Smith asked the school district’s financial adviser for tax impact scenarios between $1.65 and $1.95 million in abatement project financing, assuming current general obligation market rates on April 29 plus 30 basis points or 0.30%.

He said in paying back $1.95 million in new debt service over 15 years, the total expense was $2.9 million.

“I recommend a 10-year abatement bond to save interest. We will save more money by far this way with a 4.3% interest rate, a pretty good rate. The (tax abatement) resolution has 5.75% interest,” said Smith.

The tax impact of $1.95 million in new debt service on a residential homestead with a $175,000 estimated market value is $14.08 a year, beginning with taxes payable 2026. Commercial/industrial property with a $250,000 estimated market value is $41.51 a year. Agriculture homestead acreage with a $12,000 average value per acre is $0.18 an acre; $0.35 an acre for ag non-homestead acreage.

“I recommend we ask for more than $1.75 million because there are projects coming in over budget. The turn lane project came in $109,000 over the estimate. We made room in the budget for that, but this would be a way to build up contingency funds again to have room for other project costs we may have,” said Smith.

He said the Minnesota Ag2School Property Tax Relief Bill will pay for 70% of whatever impact the bond has on an acre of land.

“Looking at the district as a whole, ag property is more than 70% of our valuation, so the State pays about 53% of the debt,” said Smith.

“I think this is a unique opportunity to pay off debt in a less costly fashion for the foreseeable future,” said Gibbon board member Ken Briese.

“The public should know that this way, we are using cheaper money to pay for bonding,” said Winthrop board member Russ Miller.

Approval came on a motion by Briese, seconded by Gibbon board member Mark Turtle.

A public hearing on the abatement bond was set for 6 p.m., Monday, May 19 in the GFW Elementary School ECFE room.