Question: What would the cost be for a 20 year bond vs a 25 year?
For a 21 million dollar bond issue
the 20 year bonds would require 13.91 cent bond levy
the 25 year bonds would require 11.07 cent bond levy
There are a couple of factors that influence the board's decisions regarding the financing approach.
A longer term bond does not necessarily mean significantly more interest costs. After 5 years, the district can refinance the bonds to take advantage of lower interest costs. The bonds would be eligible to refinance several times throughout the life of the bond. Much like a home, you can refinance and shorter the term down as you go.
Another approach that the board could take would be to refinance a portion of the bonds into a lease purchase. Again, after 5 years, a portion of the bonds could be moved to a different method of financing.
The advantage of the lease purchase is typically a lower interest rate, shorter term (max 7 years) and it is paid for out of the building fund instead of the bond fund.
The advantage this provides is that any tax money raised through the building fund qualifies for the states property tax rebate. The property tax rebate is currently 30%. Thus, 30% of the taxes needed for the lease purchase are returned to those who pay property tax from the state rebate.
A 20 year bond, although shorter, requires a higher levy. Many of the same options described above remain. One caveat though is if the district would need to refinance to extend the terms. This would create several issues with bond ratings, interest rates, credit etc. It is much easier to shorten the term than it would be to extend the term.