The bond proposal that was supported by the East Grand Rapids community provides the Board of Education the authority to sell up to $31 million in bonds to fund the capital improvements identified prior to the election. To repay the bonds and associated interest costs on the bonds, a 2.5 mill increase in the school debt retirement tax levy was requested. With the successful passage of the proposal in May 2014, the tax levy was increased by 2.5 mills for the 2014 tax year.
In June 2014 the district sold $15.6 million in bonds at a premium of $1.8 million to provide $17.4 million in funds for the Phase 1 capital improvements. The bonds were sold at an average interest rate of 4.07%. The funds raised from the bond sale have been invested to provide maximum investment income while also maintaining the necessary liquidity to pay for the construction projects.
As a result of the low interest rates received during the June 2014 bond sale, as well as better than expected growth in the taxable value of the school district in 2014, the Board of Education will have the ability to reduce the debt retirement tax levy by up to 0.5 mills in 2015 and still be able to fulfill the principal and interest obligations for all outstanding debt.
The current plan is to sell the remaining $13.5 million in bonds that the East Grand Rapids community provided authority for in the spring of 2019. At that time, the remaining projects to be completed will be estimated for cost, and the amount of bonds sold will match what is necessary to complete the remaining capital improvement and technology projects.