Milton School District taxpayers might pay slightly less than expected for the district’s facilities referendum if the school board approves a proposed financing plan.
The board’s finance committee Thursday recommended that the school board approve a financing plan that could drop the tax rate impact from $1.64 per $1,000 of equalized value to $1.60 per $1,000.
That means residents would pay $4 less per year per $100,000 of property value than estimated.
The recommended plan would allow the district to take on its debt in one borrowing, which will achieve a level debt payment service sooner, leading to more stability in budget planning, according to a district memo.
Lisa Voisin of Baird financial group said interest rates for municipal bonds have declined steadily since November and are among the lowest rates in the last 30 years.
That is good news for the district, she said.
Lower interest rates will reduce overall interest costs as the district pays off the referendum debt. That does not mean the district has “saved” money that can be used for other projects or programming. It simply means the district will pay less interest over time, Voisin said.
Finance committee members said they want to move quickly on the bond-purchasing process so the district can capitalize on low interest rates. The full board could approve the financing plan as soon as Monday.
The bond could be bought as soon as May but no later than the end of June. The district will begin taking on debt for the referendum projects in fall, Voisin said.
Before buying the bond, Voisin will work on improving the district’s bond credit rating, which will help ensure it can attract a low interest rate. The district has an Aa3 rating from Moody’s Investors Service, which Voisin said is good.
The district likely will benefit from investment earnings, which Voisin said would not have been possible five years ago. The district could earn more than $1 million, which could pay for additional projects and/or an owner’s representative to oversee the referendum process, Voisin said.
The committee also recommended the board hire Baird as an underwriter, rather than a municipal adviser, during the financing process.
An underwriter sells bonds and monitors the bond market closely, which could help lock in a lower interest rate sooner than if Baird acted as a municipal adviser, according to a memo from the committee meeting.
A municipal adviser would provide advice but would have less control over when the district buys its bond, Voisin said.
She said hiring an underwriter will cost more than a municipal adviser, but most school districts prefer to hire underwriters.