More bang for the buck

Interest rates on $10 million school bond far less than projected

by Tom Coombe
A nearly $20 million facilities project on the Ely school campus continues to take shape, with updated drawings and some welcome news for district taxpayers - including principal and interest costs that will be nearly $2.3 million less than earlier estimates.
An update at Monday’s school board study session revealed new drawings of a structure that will link the Washington and Memorial buildings and include a new gymnasium, cafeteria, commons space, classrooms and office areas.
Meanwhile, the bond sale linked to a $10 million, voter-approved referendum has been completed with “significantly lower interest rates than projected,” according to district financial advisors.
The district will pay 1.3998 percent on the debt, far below intial projection os of 3.24
“It’s great news for the district and great news for the taxpayers,” said Jodie Zesbaugh, senior municipal adivsor for Twin Cities-based Ehlers Public Finance Advisors.
The bottom line for the Ely district is a $2,280,000 reduction in debt service levies over the life of the 20-year bond, which was approved by 65 percent of district voters in an Aug. 11 special election.
“That is a substantial savings,” Zesbaugh told board members during a remote meeting. “We’re thrilled to see those results.”
The district benefited from a competitive marketplace, with six firms vying for a contract awarded to Piper Sandler and Company of Minneapolis.
While taxpayers will benefit over the life of the debt, the district will also have additional operating capital to work with up front for the prjoect.
Projections show an initial deposit of $10,119,934 to the project construction fund, an increase of just over $307,000 from pre-election estimates.
“We might have a little bit more money than we thought,” said superintendent Erik Erie.
A $7 million grant from the Iron Range Resources and Rehabilitation Board will also pay for part of the project, with district reserves, a nearly $500,000 state school safety grant and district long-term maintenance funds providing the balance.
The bond developments have little impact on property taxes linked to the referendum in 2021.
The owner of a $100,000 residential property will see a $53 tax hike next year as a result of the referendum, with the tax increase set at $134 for a $200,000 residential property and $684 for a $500,000 commercial property. Those totals are nearly identical to pre-election estimates.
Meanwhile, progress on the project itself is being made, with the school’s facilities committee set to review plans Friday, after deadline, to give the go-ahead for schematic designs.
Renderings unveiled this week provided a closer look at the new connecting link (see drawings), including a brick front of the structure, which will serve as the main entrance to district buildings.
The high school, elementary and district offices will all move to the new area, and visitors will walk into an open commons area that will serve as a cafeteria.
New gymnasium space, a new media center as well as classrooms that will house the district’s industrial education and music departments are also part of the structure.
Plans call for construction bids in February and work to begin next spring.
“We’re hoping to break ground in May,” said Erie. “That’s the idea going forward.”
While the connecting link is a major part of the project, the district also plans major overhauls to both the Washnigton and Memorial buildings as part of the project.
Board member James Pointer pressed for more details about those components Monday.
“It’s nice to know what they’re thinking for those things as well,” said Pointer, citing specfiically the remodeling of existing office spaces.
Erie said more information would be coming from architects and said the project “will be done in phases.”
Oversight was also on the minds of board members,with Tom Omerza questioning how progress will be monitored.
Kraus-Anderson Construction, which has been tabbed to serve as general contractor, will have a project manager and superintendent on site, according to Erie.
Company officials will also keep tabs on costs and guard against overruns.
“One of their major responsibilities is to make sure this project stays on budget,” said school board chairman Ray Marsnik.