How will the project be funded? How will it impact property taxes?
What will the new school and wellness center cost?
Voters approved both questions of the bond referendum, authorizing the district to issue $47.7 million in bonds to finance the project. Multiple sources of government aid/grants and an increase in the local property tax levy will be used to pay for the bonds over a 25-year term.
How is this project being funded?
Much of the cost for N-K’s new school and wellness center will be paid for via a local property tax increase, which voters approved during the referendum on Feb. 8, 2022. However, the district worked hard to reduce this tax impact through several government aid/grant resources. More than half of the cost of the school project will be funded through these financial partnerships:
Iron Range Resources and Rehabilitation Board (IRRR) — On December 14, 2021, the IRRR approved an $18 million grant to support the payment of bonds that will finance the construction of Nashwauk-Keewatin’s new school. The grant will come in the form of a $720,000/year.
State of Minnesota — State debt service equalization aid is estimated to provide on average $741,377 annually to assist N-K in paying off the building bonds. This aid will pay for a progressively larger portion of the project the longer each year as the district completes its own payments. Thanks to this aid, a larger portion of the wellness center be funded by state assistance than if the wellness center had been constructed as an independent project.
Itasca County — Itasca County Commissioners approved a $1 million grant to support the construction of the new school.
U.S. Steel Corporation — U.S. Steel donated to the school district 42 acres just west of O’Brian Reservoir to serve as the site for the new school.
Other sources of financial support:
Approximately $1 million in mining royalties due to N-K will be used to reduce the debt for the new school.
$500,000 in federal grant money will help pay for equipment inside the new school.
Ag2School Credits — Minnesota’s Ag2School tax credit is a state program that reduces the property tax impact of school debt levies for owners of agricultural and timberland. The credit is projected to pay for approximately 11% of the first-year debt service levy. The tax credit is applicable on all agricultural and timber property, except the value of the house, garage, and one acre of land surrounding an agricultural homestead. The 70% credit will apply for the full life of the bonds.
Approximately 15% of the tax base in the Nashwauk-Keewatin school district is classified as agricultural/timberland according to valuation data for taxes payable in 2022 provided by Itasca County.
The credit is automatically assessed on all qualifying land - no application or paperwork is needed.
How will my property taxes be affected?
The tax impact of this project on residents within the district is dependent on two factors:
The market value of land owned within the school district.
The type of property (according to state law, residential, business and recreational property are each taxed at different tax rates
Is new construction the best value?
Independent experts assessed NK’s current buildings and determined that the cost to fully renovate the district’s two 101-year-old schools would be approximately $41 to $47 million, while the cost of the proposed new school construction is $42 million.
With new construction, NK students will receive all the benefits of a brand new, modern, healthy, energy-efficient building starting in 2024.
In contrast, NK school board members recognized that undertaking a multi-year renovation of the district’s current buildings would leave many educational challenges still unaddressed, such as cramped classrooms, not enough access to hands-on learning, and a lack of flex space, etc. Ongoing maintenance costs associated with century-old buildings would also persist.
The table below illustrates part of the financial rationale used by NK Board members in developing the proposed plan.
Comparing New Construction to Partial Repair of Current Buildings
*District qualifies for aid through the state’s Long-Term Facilities Maintenance (LTFM) program which would be received regardless of bonds being issued.