Greater Latrobe School District could benefit from a slightly lower interest rate for the second in a proposed trio of bond issues planned to finance construction of the new Latrobe Elementary School.
The school board is expected to vote on the borrowing of $9,995,000 at its meeting Tuesday, supplementing an initial bond issue of just under $10 million approved in November. The affiliated Greater Latrobe School Authority that conducts the financing locked in an interest rate of a little over 2.5 percent in November for the 12-year length of the initial bond issue.
Business administrator Dan Watson noted rates for nonprofits like the district are hovering around 2.25 percent. But, he acknowledged, "That could all change in the next seven days."
District financial consultant Scott Shearer of The PFM Group agreed market and legislative factors that could affect interest rates have been fluid. But, he said, barring a market anomaly, Greater Latrobe is on track to finance its roughly $32 million elementary project -- including just under $25 million in construction costs -- without requiring an increase in the school property tax rate.
Shearer recommended the district stick with its original plan of three bond issues of just under $10 million each, with the final issue to be approved for early 2018. Watson explained the $10 million ceiling earns the district a bank-qualified interest rate averaging between 0.25 percent and 0.35 percent lower than rates that would apply for a larger bond issue.
If the district were to borrow all the money at once, it would end up paying about $1 million in additional interest, based on current rates, Watson said. In case rates would dip appreciably in the coming days, the board has the flexibility to increase the amount and approve a bond issue of up to $25 million.
The school, under construction on Latrobe's Old Athletic Field, is set to open in August 2018 for about 800 students, replacing an aging K-6 building several blocks away on Ligonier Street.
