MILLBURY – The Lake Local School District issued $36 million in bonds to fund the construction of a new elementary school that was approved by voters in the Nov. 2 election, according to a news release from Treasurer Monica Leppelmeier.
The district was able to take advantage of very low interest rates, achieving an aggregate interest rate of 3.52% on bonds that have a final maturity of 2058, she said.
The November ballot asked voters to approve a 6 thousand levy for the construction of the primary school, which was based on an interest rate assumption of 4%, so at 3.52%, the residents will see less than 6 mills deducted from their tax bill for the new bonds.
The new debt has also been structured so that debt service payments, combined with debt service for the other outstanding bonds in the district, in total, do not require mileage beyond the 6 mills that were on the November ballot.
The bonds were issued with a first redemption date of June 1, 2027, which will give the district the option to refinance the bonds at that time if prevailing interest rates allow for sufficient debt service savings. .
Leppelmeier said that during the process of preparing for the bond issuance, the district’s credit rating was upgraded by Moody’s Investors Service from Level A2 to A1, which is above the average for school districts in Ohio. .
As a result of the rating upgrade, interest costs to ratepayers will be $470,000 lower over the life of the bonds.
In its report, Moody’s said the neighborhood enjoys high resident income, modest population growth, and a location within the Toledo metropolitan area. The Moody’s report also mentioned that Lake’s financial profile should remain healthy given revenue growth and expense control. According to the credit agency, the district’s rating could improve in the future if enrollment and financial reserves continue to grow.
Conversely, a downgrade could occur if reserves decline and other long-term liabilities increase.
The bonds were sold through investment bank RBC Capital Markets. City consulting firm Sudsina & Associates LLC and law firm Squire Patton Boggs (US), LLP also assisted the district in bringing the bonds to market.
Construction of the new primary is scheduled to begin in May 2023. The building is expected to open in fall 2024.
The new two-story building will be 110,000 square feet and will have 53 classrooms, up from 32 currently.
The new primary will be a PK-6 building. The existing elementary houses PK-4, with grades 5-7 in middle school and grades 8-12 in high school.