High school bond refinancing explained

Taxpayers living in the Kalispell School District have seen school taxes on two high-school district bond issues go up in 2018 and 2019, but relief is coming in 2021 and 2022.

Ultimately, by the time the bonds sunset — one in 2025 and the other in 2038 — taxpayers will see an overall savings of nearly $3.4 million as a result of refinancing.

There are two reasons for the spike in taxes over the past two years, according to Kalispell Public Schools Director of Finance Gwyn Andersen and Superintendent Mark Flatau.

The first reason was the payment schedule of a refinanced $50.7 million bond issue that was passed in 2004 and used to build Glacier High School and renovate Flathead High School and Kalispell Middle School. That bond issue was refinanced in 2016. The payment schedule went into effect in 2017, and market conditions factored into the increase, school officials said.

“Market forces dictated that investors did not want to commit dollars long-term during the low-interest environment,” Flatau said. “This required short three- to five-year maturities on a large portion of the refinanced bond sale. This provided a lower interest rate cost to the taxpayers, but required higher property-tax revenue during the first half of the 10-year term of refinancing.

“The good news is in 2021, this payment is reduced by 50 percent and in 2022, reduced by 50 percent again,” he said.

After that, the payment is expected to remain level until the bond issue sunsets in 2025.

Overall, as a result of refinancing of the 2005 bond issue, the interest rate was reduced from 4.32 to 1.44 percent and will save taxpayers $1.3 million.

The second reason for the tax increase in 2018 and 2019 is that coinciding with the payment schedule spike in 2018, a 2016 bond issue for $28.8 million that is currently funding renovation of high school buildings first appeared on the tax rolls in 2018. The 2016 bond issue was used to renovate and expand FHS, the H.E. Robinson Vocational Agriculture Center, Linderman Education Center and upgrade Legends Stadium.

“Keep in mind when making the refinancing schedule [for the 2004 bonds] we hadn’t even passed the new [2016] bond issue,” Flatau said.

The 2016 bond issue payment is slated to remain steady until it sunsets in 2038.

Reporter Hilary Matheson may be reached at 758-4431 or hmatheson@dailyinterlake.com.