August 2020

DASD has realized significant interest savings for referendum projects
Information provided by Brian C. Brewer, Managing Director, Baird Public Finance

Residents approved a $125 million capital building project in April 2019.

The Board locked in a 2.78% average interest rate last summer for the initial $90 million of project costs. (As a reference, the District used conservative planning interest rates of 4.50%-5.00% in the pre-referendum estimates.)

During the last half of the 2019-20 fiscal year the municipal bond market approached the lowest levels we have seen in the past 50 years. The Board decided to take advantage of the lowinterest rate environment and borrowed the next $24 million for the referendum project at an average interest rate of 2.12%.

The District achieved the low borrowing rates, in part, due to maintaining a high credit rating from Standard & Poor’s Rating agency (S&P).

To date, the Board has locked in the interest cost for $114 million of the total $122 million to be borrowed for the referendum project costs at a fixed average borrowing rate of 2.67% for 20 years. This will allow the District to reduce the total interest cost by over $34 million when compared with the original pre-referendum conservative planning estimates and will result in a reduction in the estimated mill rate increase for the new referendum debt by $0.29 per $1,000 of property value.