Mount Vernon Schools completed the bond sales for their Middle School exterior renovations and parking lot improvements.
Northland Securities of Minneapolis, Minn., was the winning bidder with a 3.5189 weighted average interest rate for the project. Northland Securities was bidding with the assistance of Mount Vernon Bank and Trust on the project.
Matt Gillaspie of Piper Sandler explained that because the project was backed using revenue-based bonds, roughly $427,000 was set aside in the project to make sure there was a cushion to the revenue stream.
The cost of issuance amounts to $100,532.50, but the bond seller absorbed some of that cost to bring issuance down to $50,131.93.
The district will have access to $3.857 million to tackle projects, utilizing another $700,000 on hand for some of the projects.
Gillaspie said the positive factor of the state making actions on the sales tax fund is that fund was now extended to 2071 when it would expire, an additional 20 years.
The bonds will be callable June 1, 2033.
Gillaspie said the interest rates on the bonds Mount Vernon saw were comparable to rates other districts have seen in their bid process.
“They’ve stayed roughly in an area of plus or minus 20 basis points over the past year,” Gillaspie said. “It’s a very consistent market.”
Gillaspie said the state’s efforts to draw more out of the sales tax fund for property relief will show a decrease of funds beginning in fiscal year 2027 up until the fund hits the cap of 25 percent that gets diverted, and then start growing in revenues for the district again.
“It will take until 2035 to be roughly at the same growth/size of rate you are seeing currently,” Gillaspie said. “It just means you’ll have slightly less for other uses for the SAVE fund.”
Mount Vernon has not maxed out borrowing capacity on that fund.
While the district approved the bidder and bond sales, the majority of the funds will not arrive until July 9.
Board member Tim Keegan asked if there would ever be an instance where a district was to take the second highest bidder as opposed to the low bidder.
Gillaspie said if the margins were paper thin between two bids and the second bidder had help from a local bank, that might be a case to do so, but that has rarely happened.
Gillaspie said having a local bank like Mount Vernon Bank and Trust investing on the project with larger bidders helps relieve some risk on the project as well, and why the issuance fees were reduced for the district.