Taxpayers in the Forest Lake Area School District will see a smaller tax increase next year thanks to significant savings in interest rates for the school facilities project. The $143 million package of school building upgrades will provide a wide array of changes for the school district buildings, not the least of which is enhanced security within each school building.
According to Larry Martini, the district’s director of business services, the bond will cost taxpayers approximately 11 percent less than anticipated.
“We had originally estimated that, by the second year of the bond, a homeowner with a $200,000 house would see a $177 total increase in annual local school property taxes as a result of the passage of the bond,” Martini explained. “Because our district has an outstanding credit rating, and because of the better-than-expected interest rate bids we received for this project, the amount the district will have to pay in interest over the lifespan of the loan will be less – by about $9 million. That means homeowners will not only see all of this tremendous work that is occurring, but they will also see a total increase of only $157 by the second year, not $177.”
Martini explained that the total amount of funding that the district will receive to make the upgrades and repairs in the original bond proposal will not change, but the cost to taxpayers for those changes will be less.
“The district, in terms of our budget for this bond, will not see any extra money or any changes to the work that is occurring,” Martini said. “But for the taxpayers, it means the tax increase is less, by about 11 percent.”
In addition to the savings from the current bond project, the district’s financial advisers also identified another $670,000 in savings that can be achieved by refinancing some existing bonds. This, along with the interest savings on the current project, lowers the total cost to taxpayers by nearly $10 million.
“Both of these issues will save the taxpayers significant dollars over the life of the bonds,” Martini said.
Although these interest rates are good news for taxpayers, the savings do not impact the amount of funding available for the school district’s general operating fund, which, according to Martini, continues to be a challenge due to insufficient local and state funding.