3.425 Percent Interest on School District’s $3.9-Million Bond Sale

Lake City Community School took advantage of historically low interest rates and sold bonds late last week with a true interest cost of 3.425 percent.
“We were very happy with our final interest rates, as the last few weeks leading up to pricing saw considerable volatility in global stock markets and confusion about the future direction of US interest rates,” said Lake City Community School Superintendent Rebecca Hall. “These funds provide us with the matching money needed to secure the $9.4 million grant we received from the State of Colorado’s Building Excellent Schools Today (“BEST”) Program last spring,” added Hall.
Working with bond underwriter George K. Baum & Company of Denver, Lake City Community School was able to lock in a true interest cost of 3.425 percent for the $3,950,000 bond issue. The low rates were supported by Lake City Community School’s State Intercept Rating of “Aa2” from Moody’s Investor Service and the bond’s bank qualification, which resulted from the issuance size being limited by voters to less than the $10 million threshold for bank qualification. “This allowed the school district to lock in very low interest rates, since volume in the bank qualified market has been down 50% over the last two years,” according to Todd Snidow, a senior vice president of George K. Baum & Company.
“We are delighted to have secured low financing costs and to get our construction project going before building costs skyrocket,” said Board of Education President Phillip Virden.
Business Manager Susan Thompson stated, “We are pleased to report to local taxpayers that the bond issue was well received and we were able to do much better than the numbers approved by voters in the ballot question. In fact, the total repayment cost of the bonds is $553,617 less than voters approved in November, due to the District’s credit rating and low interest rates.”
The 20-year bond issue was sold with a 10-year call feature, which will hopefully allow the District to pay off the bonds early, as directed by the Board of Education.