CEDAR FALLS — Cedar Falls Community Schools will pay nearly 4% interest on $69.9 million in bonds issued to help fund construction of the new high school.
The Board of Education approved the sale of the bonds to Citigroup Global Markets at a special meeting on Wednesday. The total purchase price was $70.04 million, including a bounty payment to the district of $136,000. The Los Angeles firm offered the lowest interest of the three bidders on the debt, an effective interest rate of around 3.98%.
Yet those interest payments will total $32.79 million over the 20-year life of the general obligation bonds.
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“The total interest, you can see, is quite significant,” said Maggie Burger of Speer Financial, who advised the district on the sale. She noted, however, that there is a call date of June 1, 2031, when the remaining bonds can be refinanced and prepaid. Otherwise, schools in Cedar Falls will finish paying off the bonds in 2042.
Burger and Superintendent Andy Pattee said that through the planning process for the new high school, an interest rate of 4% or more was expected for the bond sale. But officials were watching those factors as they considered the timing of the bond issue.
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“Probably eight months ago we still thought we were going to sell in August,” Pattee said. The administrators decided to accelerate this deadline to “get ahead” of interest rates which could continue to rise.
Two national bond rating companies had a mixed response to Cedar Falls schools taking on additional debt. Standard & Poor’s continued to give the neighborhood an A+ rating while Moody’s Investors Service downgraded it.
“Moody’s downgraded the district from its Aa2 rating to its Aa3 rating,” Burger said. The agency cited the doubling of debt and fluctuations in reserve funds. She noted that an accumulation of reserve funds helps reduce the impact on taxpayers.
“They think you’re definitely a strong double-A,” Burger said, adding that the rating will go up “as you pay off that debt.”
The bonds, one of the sources of revenue for the $112.71 million construction project, will be repaid with property tax funds. The school site is located on 69.6 acres north of West 27th Street and west of PE Center Drive.
The board action locked in the interest rate, but further approvals will be needed at the May 23 meeting to finalize the sale. The process ends on June 7, when the funds will be in district accounts.
Aerial drawing of Cedar Falls High School
An architect’s drawing shows a view of the planned Cedar Falls High School with a pool addition that boosters are currently raising funds for.
The site plan for Cedar Falls High School was presented to the Cedar Falls Planning and Zoning Commission on Wednesday.
New SSFC exterior entrance
An architect’s drawing showing the facade of the planned new Cedar Falls High School.
New CFHS entrance and lobby
Architect’s drawing showing the entrance and hall of the new Cedar Falls High School.
New CFHS Learning Studio
Architect’s drawing of a classroom, or “learning shop”, in the new Cedar Falls High School.
New common CFHS exterior
Architect’s drawing of the rear exterior common area wall of the planned new Cedar Falls High School.
New SSFC co-learning studio
Architect’s drawing of a “co-learning studio” in the planned new Cedar Falls High School. These flexible breakout spaces will be outside…
A photo rendering by Invision Architecture in Waterloo shows a planned co-working space in the new Cedar Falls High School…
New Common CFHS Interior
Architect’s drawing of the common area of the new Cedar Falls High School.
New CFHS Gymnasium
Architect’s drawing of the gymnasium of the new Cedar Falls High School.
New CFHS Learning Wing
Architect’s drawing of the entrance to the “learning wing,” or classroom, of the planned new Cedar Falls High School.
New CFHS Main Corridor
Architect’s drawing of the main hallway of the new Cedar Falls High School.
New CFHS Office
Architect’s drawing of the office for the new Cedar Falls High School.
Cedar Falls High School Pool Drawing
An architect’s drawing shows a view of a future pool planned for the new Cedar Falls High School.
This rendering by Invision Architecture shows the planned main entrance to the new Cedar Falls High School building.
This rendering from Invision Architecture shows the planned dining hall, now referred to as the common area, in the new Cedar Falls High School.
Artist’s rendering of solar panels on the new Cedar Falls High School
An artist’s rendering of the possible placement of solar panels on the roof of the new Cedar Falls High School was shown at Cedar Falls Uti…