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Central Rivers AEA board commits nearly $2.8 million to pay off building loan in two years
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Central Rivers AEA board commits nearly $2.8 million to pay off building loan in two years

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The Central Rivers Area Education Agency office building.

CEDAR FALLS — Central Rivers Area Education Agency has a plan to pay off the loan for its headquarters building in two years, saving $620,000 in interest.

The board of directors Wednesday approved committing $2.78 million to the lease-purchase debt in June 2023.

Michael Kalvig, the agency’s chief financial officer, said that amount “will actually give us enough funding to pay off our debt early.” By that point, the remaining amount owed on the $6.08 million loan will be $4.49 million. The loan was for the $4 million property at 1521 Technology Parkway plus remodeling there and at other agency buildings in Clear Lake and Marshalltown.

Since signing the purchase agreement in December 2016, Central Rivers has paid four years of $475,343 in interest and principle. It has also set aside additional funds to be used for paying ahead in June 2023 – $150,000 annually plus interest earned and lease revenue from its former office buildings on Cedar Heights Drive.

The original debt schedule would have had the agency repaying the loan through the 2032-33 fiscal year. The lease-purchase agreement allows the AEA to begin paying more than the $475,343 in June 2023. Paying the debt off “saves us a little over $620,000 in interest over the next 10-year period,” said Kalvig.

He noted that the commitment of funds approved by directors signals the agency’s intent to pay off the loan in two years. However, the board would need to approve a resolution in 2023 to actually take the action at that time.

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Kalvig said there are a couple reasons Central Rivers was able to commit the funds at this point for future use.

“The agency’s been in a good financial position the past two years,” he explained. And, with the onset of COVID-19 pandemic restrictions last year, “over 400 staff members” who normally do their work within schools stopped traveling to those buildings, saving the reimbursement usually paid to them. In addition, less was spent for utility payments because of the reduced use of agency facilities.

“So, we actually experienced some savings,” said Kalvig.

The agency had always planned to pay off the loan ahead of time, but originally proposed to do that with proceeds from the sale of the former office buildings. One of those buildings has been sold, but two others are still owned by the AEA. Currently, they are being rented by the Waterloo Community School District to house Lowell Elementary School while a new building is being constructed.

Directors on Wednesday renewed the lease with Waterloo Schools for $8,333 per month, or $100,000 annually. The facility is being leased on a month-to-month basis.

Kalvig noted sale of the buildings could still fund or help fund the debt repayment. Lowell is expected to move out of the facilities once the new school opens, projected for January 2022.

“Our intent is to put those buildings back on the market,” he said. “We’re really hoping we can sell those buildings.”

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Education Reporter

I cover local schools and higher education for The Courier, where I’ve been a reporter for the past two decades. I’m a Minnesota native and have previously worked for newspapers there and in Illinois.

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