Big Sky School District

BIG SKY – On July 17, the Big Sky School District completed financing $9.745 million in bonds for its school improvement project, which will fund a new elementary school. The district plans to complete an additional loan of up to $455,000 in 2014 for the remaining authorization of $10.2 million after construction bids and costs are known. The term of these tax-exempt bonds is 15 years, with a final maturity set for July 1, 2028.

Final interest costs were lower than originally projected to voters, despite recent increases in interest rates, according to district administration. With the final bond figures and estimated loan costs, taxpayers will have an estimated $109,177 less in interest costs over the term of the bonds, compared to election estimates.

Mills to pay debt service on the bonds will commence in 2014/2015 and are estimated to be 32.04; for a home valued at $100,000 on the tax rolls, that would mean approximately $47.19 in new taxes. The projected mills at the time of the election were estimated at 34.63.

The true interest cost rate on the bonds is 3.11 percent, 0.14 percent less than the original estimates of 3.25 percent. Yields to investors ranged from 0.33 percent in the first maturity in 2014, to 3.75 percent in 2028. The bonds were offered and sold through D.A. Davidson and Co. to local and statewide banks and individual investors.

Approved by voters on May 7, the bonds are being issued to acquire two parcels of land on Windy Pass Trail contiguous to and north of the school campus, as well as to design, build and equip a new complex to serve prekindergarten through fourth grade classes.

As a part of the financing process, the district received an “A” credit rating with a stable outlook from Standard & Poor’s Ratings Services. The S&P rating report specifically indicates the favorable rating is due to the following:

• Good local economy situated in the greater Bozeman area, coupled with strong income indicators
• The district’s good tax base growth in recent years, with a lack of concentration in the top 10 taxpayers
• The district’s adequate financial position maintained during the past two fiscal years with a formal reserve policy of maintaining at least 5 percent of expenditures in its general fund reserve

Partly offsetting these foregoing strengths, according to S&P, is the district’s very small reserve levels on a nominal basis and very high debt burden on a per-capita basis.