LOOMIS BOND FINANCIAL INFORMATION

What does it mean when the resolution and ballot language say ‘not to exceed $18,250,000’.

The not to exceed par (principal) amount of bonds listed on the ballot means that the Loomis Board of Education can issue up to, but not over $18,250,000 for the project defined on the ballot if approved by the majority of voters. Due to the fact that interest rates, the actual amount of bonds to be issued, and future valuation amounts are not yet known, the voters are voting FOR or AGAINST a maximum bond issuance amount only.

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Does the $18,250,000 include interest?

No. The $18,250,000 is the amount of bond proceeds estimated to be necessary to complete the project. Much like when you finance a car, home, or other items the interest is calculated on top of the principal depending on the current market and the length of the financing. 

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How is the impact of the interest being communicated to the public?

The district’s municipal advisor has assisted the district in determining the preliminary annual impact of principal AND interest payments on the bonds. The most conservative approach to do this is to assume the full amount of the approved bonds are issued all at once at the current bond market rates for the intended maturity length of the bonds. At the time of financial information being put out to the public on the bonds the following assumptions were in place:

• Maximum amount of bonds allowed:            $18,250,000
• Current bond yield rates (20 year):                  4.50%
• Preliminary total interest:                                    $10, 600,000
• Preliminary total principal and interest:       $28,850,000
• Average Annual Principal and Interest:         $1,442,500

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What other considerations are there when it comes to bond issuance and interest?

The most conservative assumptions have been used when it comes to the bond issuance, but the following considerations will most likely be true:

• All the bonds will not be issued at one time
  • Bonds will be issued as needed to pay for construction
  • Breaking the bond into (2) different issuances in 2025 and 2026 will make them Bank Qualified and result in lower rates
• The actual bond rates will be lower than current estimates
  • Bond rates have already begun to lower since initial information was shared with the public
  • Bond rates are locked when issued so if rates continue to decline a second issuance in 2026 could have even lower rates
• The bonds may be refinanced to lower rates over the life of the bonds
  • The bonds can be refinanced to lower rates after 5 years or left as they are if there is not an opportunity for savingsMost 20-year bonds are refinanced to lower rates more than once during the life of the bonds
  • The district’s existing bond issued in 2007 at $3,500,000 has been refinanced 3 times resulting in the initial rate of around 4.15% being reduced to a final rate of around 0.5%.  By doing this the board was able to save over $700,000 in interest and reduce the bond length by a year.

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If valuations go up will the amount district residents pay on the bond go up also?

Once the bonds are issued and the rates are locked the annual bond payments (principal and interest) will be fixed for the life of the bond unless refinanced to lower rates. This means that the actual tax dollars needed each year will not change. Each budget year the board must set the bond levy based on that year’s certified valuation to bring in the taxes to make the payment. If valuations increase then a lower levy can be set to bring in those dollars. If valuations decrease then the levy can be higher to bring is those same dollars. The tax dollars needed to make the bond payment would stay the same unless reduced by refinancing at a lower rate.