H-BC sells bonds for new elementary school project

Bids to finance a portion of the $29.975 million needed for the new Hills-Beaver Creek Elementary School in Beaver Creek came in with interest rates lower than anticipated.
Five bids were submitted for the $20.5 million bond sale on June 20.
Hilltop Securities of Dallas, Texas, submitted the lowest bid of 3.8352 percent interest.
At their June 26 meeting, H-BC board members approved granting the 20-year general obligation bond to Hilltop Securities.
All five bids were lower than the pre-interest sale rate of 4.35 percent estimated by Ehlers Inc., the district’s public financial advisers, in the May presale report.
Aaron Bushberger with Ehlers presented the final sales results to board members.
“Actually prior to the (April 11) election we were assuming 5 percent,” he said. “So we were below both thresholds — really good news here.”
The lower-than-expected interest rates result in an additional $696,279 in premium and interest savings from the presale estimates. The savings will be applied to the building project.
The highest of the five bids was 3.9105 percent from Northland Securities on behalf of Security Savings Bank in Hills.
“To have five bids within seven or eight basis points is really indicative where the market is at this time,” Bushberger said. “Overall, you’re getting more funds at a lower interest rate — both positives for the district.”
H-BC district voters approved a two-question $29.975 million bond referendum on April 11.
Because plans for the new elementary school and improvements at the Hugo Goehle gymnasium and secondary school occur over a two-year period, an additional bond sale of $8.475 million will take place next year, possibly in April.
“The second (bond) issue is going to be dependent on, if you need the funds or not, where your bids come in,” Bushberger said. “We will really be able to get a real good and accurate picture at that point.”
Bid letting is expected to take place in October or November.
 
H-BC received a solid credit rating
Hills-Beaver Creek Public Schools received an “A+” credit rating for the June 22 bond sale, along with a “AAA” credit rating from the Minnesota Credit Enhancement Program.
Noted in the S&P Global credit report is a stable outlook in the district and the state, primarily due to a growing tax base.
In 2023, assessed values from residential assessments increased 19 percent from the previous year. Preliminary data has assessed values of agricultural land increasing 20 to 30 percent in 2024.
“This growing tax base somewhat mitigates the large debt burden and future elevated debt carrying costs,” the report stated.
Currently the district has $6.875 million in debt from the secondary school built in 2010. This debt will be retired in 2035.
Key to the district’s credit stability is its financial management team, according to the report.
“We believe (H-BC) has good policies and practices that resulted in significant growth in general fund reserves, which averaged an annual $400,00 surplus over the past eight years,” the report noted.
Also noted was the district’s reserve policy to maintain 20 percent of general expenditures.
The report noted a downside scenario that if the district unexpectedly materially draws down its available reserves, the credit rating could be lower.
As a participant in the state’s credit enhancement program, however, H-BC can use the state’s higher credit rating for the bond sale.
Under the program, if the H-BC district fails to repay its debt, the state will service the debt from its general fund.