The Cost

Learn about the tax impact of the plan.

Q:  What would the tax impact be?

The school would be approximately 102,000 square feet.  For comparison, Lincoln School (the former Target building) is roughly 89,000 square feet.  The cost of the proposal is $54.8 million payable over twenty-two years with an estimated bond at 5% interest.  The $54.8 million dollar request assures us that we can build the facility that we need and enables us to utilize some financial tools to lower tax impact for our community.

The following table illustrates the tax impact of a new school across multiple property classifications and valuations:

The average home value in the Fergus Falls Public School District is approximately $250,000.  If the new school vote was approved, the tax increase on a home at that valuation would be $100 annually or $8.00 per month.  If a home was valued at $150,000 the tax increase would be $4.00 per month.  If a home was valued at $500,000 the monthly tax increase would be $20.00 per month - comparable to a monthly Netflix subscription.  

Commercial/Industrial is straightforward.  A property valued at $250,000 would pay an annual tax of $208.  

The tax calculation for Agricultural/Homestead is based on the average value per acre, including land and buildings.  If a person owned 500 acres of agricultural land valued at $5000 per acre, the annual tax would be  500 acres x $0.37 per acre which is equal to $185.00.  This is possible due to a 70% reduction through a School Building Bond Agricultural Credit.  Essentially, agricultural property is subsidized to reduce the tax impact on farmland.  Note - the rate per acre doubles if the farmland is Non-Homestead, but the same basic calculation principles apply.  With the example above, for Non-Homestead agricultural land valued at $5000 per acre multiply the number of acres by $0.74.  

Season Recreational Residential property is the final classification that follows a different tax rate.  A property in this classification valued at $300,000 would be taxed $147 per year or $12.00 per month.  

The following table illustrates the district’s present bond obligations and includes (blue column) the additional tax impact if the new 3rd - 5th grade school is approved by voters.

The gray columns represent existing debt.  The bulk of this is paid off following taxes payable 2027.  This is the bond that provided the remodeling and additions to KSS.  The remaining gray column that runs through taxes payable 2030 was for the Cleveland classroom and gym expansion.  There is little remaining debt after that.  The small portions represented by the maroon color on the top of the bars is lease levy.  The blue portion of the bars would be new debt (3rd - 5th grade elementary school) that is feathered into existing debt and then extends over the twenty-two year payback period.  The tax rate remains stable through the debt repayment period.  

The amount requested for the project and payment schedules were done to provide the necessary financial support for the project while also mitigating the tax implications.