To the Editor,
For any new public building, it is important to learn how the payoff would be structured.
Let us take the proposed Chatfield gymnasium bond referendum vote scheduled for February 11, 2025.
If the referendum passes, it will be paid for using a technique called a wrap-around bond. That is, it would be wrapped around the current two bonds for the elementary and high schools. The payoff would cost $19,652,039 with $8,678,167 in interest. Compare this with a loan such as you would get for your home. That type of loan would result in interest of $6,422,831.65. A difference of $2,255,335.35. That is more than a $2.25 MILLION difference, simply by how the bond would be structured to be repaid.
How does this work? It is by paying off the bond principle at a slower rate than a traditional home loan. It has the effect of paying a little less each year but for a longer period. It adds up fast. And it may not be paid off early to save on the interest.
It is my opinion that the extra $2.25 million is better off in the taxpayer’s pocket than being paid out in interest on a bond. It is indeed more attractive to a bond purchaser but at the taxpayer’s expense.
The above is calculated using the literature’s proposed example bond interest of 5%.
David Sovinski
Chatfield, Minn.