Herald and Journal, April 26, 1999

Financial impact estimates of HLWW-LP consolidation

By Carolyn Drude
Ehlers and Associates

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.Financial impact chart

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:

  • the grant would be approved by the Year 2000 Legislature;
  • following the grant award, voters in the districts would approve the bond issue and acceptance of the grant as well as consolidation of the districts, and
  • collection of the new tax levy for the project would begin in the year 2001.

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

District 2687 (HLWW) impact

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).

District 424 (LP) impact

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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