The Redwood Valley schools campus is going to be significantly larger in 2019, as the proposal to construct the Redwood Falls Estebo Career Development and Training Center facility has been approved by the Redwood Area Board of Education.

Originally proposed by Orrin Estebo, which included a $1 million commitment to see it come to fruition, the idea has been in process for several months.

The project got the green light during a special meeting held April 2 when the Redwood Area Board of Education saw the bids for the construction of the facility as well as the financing to pay for it.

John McNamara of Wold Architects was in attendance to present the bids, which were opened March 27. There were three bids submitted for the project, and McNamara said all three bids were very tight.

The estimate for the construction portion of the project was $3.49 million, which included a $200,000 alternate for an ensemble room addition to the music department.

The low bid for the project was from KUE Contractors of Watkins, which submitted a base bid of $2,806,918, with an additional bid of $208,156 for the alternate. The total construction bid was $3,015,074. McNamara said having the bid below the estimate is good news, for the district. 

McNamara added it allows for more prospective funding for the project costs, including the possibility of having more funding available for furniture and equipment, as well as to increase its contingency.

In total, the total project cost is $3.95 million. That cost also includes completion of the lower level parking lot project that was started in 2017. That part of the project will make the remaining portion of the lot concrete. McNamara said people are looking for work this time of the year, and he said that is indicated in the competitive bids that were submitted.

He added KUE Contractors is a company Wold Architects has worked with in the past on projects, adding he has no reservations about awarding the bid.

“They are excited to get to work,” said McNamara, adding the plan is to begin the project at the end of the school year.

Following the award of the construction project bid, the school board then heard from Andrea Uhl of Ehlers which sent out a request for proposals (RFP) for the lease purchase financing portion of the project.

The RFP was sent to five different banks and leasing companies with requested financing of $2.42 million to be paid over a period of 15 years. Three institutions submitted a proposal, with Bremer Bank submitting a bid with an interest rate of 3.64 percent.

According to Uhl, the financial comparison for lease purchase proposals takes into consideration the interest rate as well as the up-front costs to execute the lease purchase. Uhl said the estimate for those fees was $2,500, with the Bremer Bank proposal including $1,595 for those fees.

Other terms taken into consideration also include the availability of an escrow account, as well as prepayment options. Bremer Bank said it would act as the escrow agent with no fee to the district, and prepayment can be made at par on any payment date.

In the end, the board approved the lease amount in the bid submitted by Bremer Bank at $2,419,095. At the end of 15 years the total payments would be $3,131,850 and the annual payment will be $208,790.

Uhl said that is $17,000 less than was originally estimated.

The remaining funds for the project will come from the $1 million commitment from Estebo, as well as a $550,000 commitment from the school district’s undesignated reserves.

Based on the lease levy, a residential homestead with an estimated market value of $200,000 will pay $31 more annually, with a commercial property with a market value of $500,000 paying $159 more annually.

Agriculture homestead land valued which is at $8,000 per acre will see a 69 cent increase per acre annually.

While the district will have more than $200,000 of its lease levy capacity tied up each year, Scott LeSage, school director of finance, said there is still more than $44,000 of capacity, or more than $600,000 over 15 years that can be used for other potential projects.

The school board approved the submitted proposal from Bremer Bank.

Matt Johnson, Bremer Bank of Redwood Falls president, expressed the fact that Bremer is excited to be part of the project, adding it will be the local bank who will be directly involved as the process moves forward.