The case for the recent bond issue for the Lansing School District, at least from supporters, hinged partly on three factors.
The first was the possibility that state aid on bond and interest, which would pay 41 percent of the total estimated cost of the project, would be eliminated by the state Legislature. But historically low costs for construction coupled with record low interest rates for bonds were also cited as reasons voters should approve the issue, which when finished will result in the construction of a new high school, renovation of the current high school into a new middle school and new athletic facilities.
On Monday, the Lansing School Board got some good news on those promises. In November, the board had authorized Leawood-based investment bank Piper Jaffray to sell the bonds for the project. Even at that time, the firm was looking at falling borrowing costs, according to Piper Jaffray Managing Director Greg Vahrenberg.
“We were very pleased with the trend on interest rates and the estimate at that point in time was an average interest rate of about 3.87 percent, so noticeably lower than the 4.3 percent we used during the campaign,” he said.
Vahrenberg, however, said the rates dipped below the record set earlier that year. The new school bonds eventually sold with an interest rate of 3.38 percent, aided partially by a solid bond rating from Moody’s for the district.
Vahrenberg also said that some of the bonds were sold with a premium, promising higher short-term yields for investors. In total, he said the sale itself actually generated enough to maximize the amount available for the construction fund at $73 million, pay the costs associated with issuing the bonds and provide an extra $2.922 million for the district.
That last part is good news for both the district and taxpayers, according to School Superintendent Randy Bagby. He said that $2.9 million will be put in the bond and interest fund, where it will be used to help make debt payments due every 18 months.
“Having that balance helps me to levy less to make those payments,” he said.
While not finalized, Bagby said he estimated that it could reduce the expected bond and interest mill levy cited in campaign literature, 21.5 mills, by about 2.5 mills.
With that announcement, Bagby said two of the district’s three selling points from the bond campaign have met or exceeded expectations.
“Now if the construction costs hold true, our perfect storm will be perfect,” he said.
The board adopted a resolution for the issuance of general obligation bonds. They also adopted a set of tax and securities compliance procedures. At the end of Monday’s meeting, Bagby said the board also named current district maintenance director Mike Williams as the project manager and Lansing Educational Foundation Director Nineveh Carvan as the community liaison for the project.