At their meeting on Monday night Hills-Beaver Creek board members rejected the only bid to purchase their $485,000 in general obligation bonds.
Betsy Knoche, financial adviser with Ehlers and Associates Inc., informed the board that she and her co-workers were “shocked” when they received the bids Monday morning.
They had anticipated having two bidders submit proposals but only received one. That bid from United Bankers’ Bank came with a 4.4946 true interest rate. This rate was higher than the 3.23 the firm had estimated in their February proposal to the board.
The interest rate increase brought the total paid in interest to $284,773 over the 23-year life of the bond. That was an $82,000 increase over the estimates.
Accepting the bid would also increase the tax estimates that were given taxpayers.
It also increases the first payment to $15,000. This payment has to be paid before any of the bond money is collected and would come from the district’s Debt Service Fund.
When attempting to explain the bid, she said the bidder pointed to the district’s negative fund balance.
Knoche went on to say that the current fund balance should not have been a factor, because the district signed up for the State of Minnesota Credit Enhancement Program, which guarantees their bond payments will be made.
“This was just shocking,” she said. “If you can’t pay — the state steps in.”
She gave the board two options. The first was to pass a resolution accepting the bid. The second is to reject the proposal and exercise their right to award the sale to someone presenting a more favorable bid within 30 days.
Board members expressed concern for the timeline if they reject the proposal. The district needs to collect the funds from the bond in time to pay their settlement payment to Gil Haugan Construction.
This settlement must be paid within 90 days of the board’s acceptance of the settlement agreement. That payment is due in early May.
Knoche said her firm could ensure a “swift” closing and that the district would have the funds before the payment is due.
As for a better rate, Knoche could not make any guarantees. She said her firm would push to get more bidders, and although they can’t guarantee anything, it would more than likely be a better rate.
The board is scheduled to act on the new bids at their April 8 meeting.
LPA tuition increase
Board members approved an increase to the 2013-14 Little Patriot Academy tuition and bus rates.
Holthaus said nine years had passed since the tuition was adjusted last year.
He proposed a $160 tuition increase per year and $80 busing increase for the Monday/Wednesday/ Friday class.
The increase brings tuition to $800 and busing to $280.
Tuesday/Thursday class tuition increased $160 to $640. Busing for those students increased $80 to $232.
Midday busing offers licensed day care drop-offs.
The board looked at tuitions other area programs are charging.
In other board news:
•The board accepted a $1,187 bid from Harlan Stueven for H-BC’s 1994 International 3800/Amtran Body 65-passenger bus.
The board also accepted a $1,500 bid from Rodney Scholten for a 1988 International 3800/Thomas Body 35-passenger bus.
A third bus, the 1997 GMC 3500/Thomas Body 17-passenger, did not receive any bids.
•The transportation committee presented pricing options for leasing a used bus.
Tim Baker said the cost to lease the bus would be $1,200 for a nine-month period of time. That includes all maintenance and allows for unlimited miles. The board agreed to explore the option further.
•Holthaus reported the music department raised $5,600 to purchase risers. The district will pay the remaining $130. The new risers will be used at both the elementary and high school.
•The district awarded one part-time K-3 reading tutor through the Reading Corps program.
•The board accepted the following donations: $200 from the Beaver Creek Sportsman’s Club for H-BC Foundation scholarships, $1,000 for the Fritz and Martha Nuffer Scholarship and $310 for the George and Luella Schlueter Scholarship fund.