By Tony Wittkowski | Business Reporter | The Herald-Palladium
ST. JOSEPH — St. Joseph school board members are happy with news the district received eight bids from potential investors for its first-of-three series bond.
The board was even more pleased to learn the interest rates offered were well under what the district expected.
Superintendent Ann Cardon told board members Monday the bond counsel is obligated by state law to take the lowest bidder. The district sold its bonds to Fifth Third Securities for an interest rate of 1.674 percent.
“We were quite excited in how low the bids came in,” Cardon said Monday. “They were lower than what we estimated. When we were putting the proposal together we were being as conservative as we could to make sure our risk was lower.”
Kathy Hamilton, the district’s chief financial officer, said they considered the bids to be impressive because they were so close.
The lowest bid came in at 1.674 percent with the second-lowest being 1.678 percent. Although the highest bid was just over 2 percent, Hamilton said they were surprised because they had originally projected a 3.75 percent interest rate.
“To receive eight bids speaks well of the district,” Hamilton said. “The rate was much lower than predicted. That means we will be able to pay the bonds off quicker.”
Hamilton said the bond was sold and will be deposited into the Michigan Liquid Fund by June 28. MILAF will serve as the financial institution the bond proceeds will be deposited in, where as Fifth Third Securities are the bond purchasers.
Hamilton said the district will be able to draw down on those funds as needed when the board buys the allowable items under the bond’s language.
Money raised from the bond sale will be used to support upgrades in technology, security, transportation and building improvements across the district.
The series bond approved by voters in May is expected to raise more than $8 million over 12 years.
The district will issue $2.45 million in 2016, but will have to put the bond out for bid for the $3.05 million in 2020 and again for $2.89 million in 2024.