The District 196 School Board on Tuesday approved the sale of $300 million in general obligation facilities maintenance and school building bonds to raise funds to pay for construction of facilities improvements that were approved by district voters in a bond referendum special election in May.
Eight companies submitted bids to purchase the bonds. Jefferies of New York submitted the low bid of 3.94%, which is less than the 4.75% rate that was estimated in January when the board called for the two-question bond referendum election. The lower-than-expected rate reduced the number of annual debt service levies on the bonds from 25 years to 24, and results in estimated debt service payments being approximately $40 million less than projected.
“This is good news all around,” said Jodie Zesbaugh, senior municipal advisor for Ehlers, the district’s financial advisor. She said the lower rate means the district will be able to pay down the principal amount more quickly and the total cost over the life of the bonds will be less than expected. Zesbaugh also commented on the district’s favorable Aa2 rating from Moody’s Investor’s Service, which served as an underlying rating, and the MN Credit Enhancement Rating of Aa1.
The sale of the bonds included a reoffering premium of nearly $12 million, some of which will increase the amount of funds the district receives from the sale to be used for the facilities improvements.
“The district will be getting more than expected from this sale and the impact for taxpayers will be less than we told them during the referendum,” Board Member Joel Albright said after the meeting.
This was the first of two bond sales the district will have to pay for the $493 million in improvements, which among other things include a new elementary school (site pictured above), new Rosemount Middle School, renovation and addition to Rosemount High School, and an activity center addition to all four comprehensive high schools in the district. The second bond sale will be slightly smaller and is scheduled for November 2025. Proceeds from the second bond sale will pay for construction of the remaining facilities improvements. All improvements from the 2023 bond referendum are expected to be completed by 2028.