Delano Herald Journal

Serving the communities of Delano, Loretto, Montrose, MN, and the surrounding area

Financial impact estimates of HLWW-LP consolidation



The accompanying chart compares preliminary estimated costs
and tax impact of two building programs:

1. A building program for the Howard Lake/Waverly/Winsted
District 2687 alone.

This program would construct a new 450-student secondary
school with a bond issue of $12,565,000.

This cost would be paid by District 2687 residents only.

2. A building program for the Lester Prairie District 424
and the Howard Lake/Waverly/Winsted District 2687 in cooperation.

This program would construct a new 650-student secondary
school for the combined districts at a cost of about $16,170,000.

However, the districts would apply to the state for a cooperative
secondary facility grant in the total amount of $6,000,000, resulting in
a bond issue estimated at this time to be about $10,l70,000.

This cost would be paid by residents of both districts.

The existing debt of the Lester Prairie School District
may or may not be shared by District 2687, depending upon agreements made
by the districts, so both options are included in the chart.

For purposes of this chart, it is assumed that:

All amounts are based on a 20-year bond issue.

District 2687 will have paid off its existing debt by tax
year 2001.

The estimated tax rate increase for the bond issue needed
for the 450-student secondary school is about 25.82 (or about $303.39 per
year for a $100,000 home).

If Districts 2687 and 424 cooperate, build a 650-student
secondary school, and receive the $6,000,000 grant, the estimated tax rate
increase for District 2687 is estimated to be about 16.90 (or about $198.58
per year for a $100,000 home).

This assumes that District 2687 will not share in the existing
debt of District 424.

If Districts 2687 and 424 build the cooperative secondary
school and District 2687 also shares in the payment of District 424 existing
debt, the tax rate increase is estimated at 18.57, (or about $218.20 per
year for a $100,000 home).

In summary: The levy needed to pay principal and interest
on bonds is projected to be less for District 2687 residents, if a cooperative
secondary facility program is pursued.

Rather than paying a tax rate of 25.82 for a $12,565,000
secondary school, the projected tax rate for the cooperative secondary facility
would be 16.90 (without sharing debt) or 18.57 (if debt is shared).

The current debt outstanding for District 424 will require
a debt service levy tax rate of about 14.70 in the year 2001.

This would mean about $172.73 per year for a $100,000 home.

If Districts 2687 and 424 cooperate, build a 650-student
secondary school and receive the $6,000,000 grant, the estimated tax rate
increase for District 424 is estimated to be about 16.90 (or $198.58 per
year for a $100,000 home), if District 2687 does not share in the payment
of its existing debt.

The total tax rate for debt after the increase would be
estimated at 31.60.

If District 2687 does share in the payment of the existing
debt of District 424, the total tax rate increase is 3.87 or about $45.47
pear year for a $100,000 home. (The increase is from a tax rate of 14.7
for existing debt to 18.57 combined).

In summary: The additional levy needed to pay principal
and interest on bonds for a cooperative secondary facility is projected
to be about 3.87 if existing debt is shared by District 2687 and about 16.90
if existing debt is not shared.

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