Spokane Journal of Business

Spokane school district garners record interest rate in bond sale

Favorable financing will enable district to hold tax level steady

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Spokane Public Schools recently has sold $50 million worth of bonds at an historic low interest rate of 2.9 percent as part of the 2009 voter-approved $288 million bond authorization to fund school construction projects, school district representatives say.

The low interest rate is good news for Spokane taxpayers, says Mark Anderson, associate superintendent for school support services, because the district is able to fund more projects, while keeping the tax rate flat. It had told voters it would pursue the upgrades while keeping a flat tax rate at $1.96 per $100,000 of assessed property valuation, which it has done, Anderson says.

"For a flat tax rate, we think we can slowly and steadily modernize our schools," he says.

The district got the low interest rate in the recent transaction after receiving high credit ratings by two independent agencies, Moody's Investors Services and Standard & Poor's, Anderson says. Maintaining high credit ratings help to keep the district's borrowing costs low, he says.

Since the bond authorization by voters in 2009, the school district has sold the bonds in increments of $50 million to $75 million to fund capital projects, he says. This is the fourth bond sale, with two more expected, in November 2013 and November 2014.

"The bottom line is we got the best interest rates that we've ever received," with this recent bond sale, Anderson says. "We've continued to be rated as a great credit risk by credit agencies."

He adds, "When you go to sell bonds on the market, it's just like getting a mortgage. The better your credit, the more interested companies are at getting you a better interest rate."

The district is required to get credit ratings from two independent agencies each time it sells bonds, Anderson says, and the recent good ratings included an "Aa1" rating from Moody's and an "AA" long-term rating from Standard & Poor's.

The ratings were due, in part, to the district's recently renewed maintenance and operations levy and sound financial management policies and practices, says Terren Roloff, a district spokeswoman. Anderson says the agencies also consider the Spokane economy and whether it has a relatively stable tax base.

Spokane Public Schools has a districtwide capital improvement plan that totals over $330 million, when including the $288 million bond authorization and state matching funds of about $44 million.

Under that capital projects plan, the upgrades include renovations or modernizations of four elementary schools and Ferris High School. It also covers new ventilation, roofing, and flooring at nine elementary schools; safety, security, and technology updates for the entire district; and building, field, or playground improvements for all schools.

Currently, two major construction projects are under way—the Ferris modernization and expansion and a $18 million Jefferson Elementary replacement project. A $16.4 million Westview Elementary replacement job is substantially complete, and the school opened to students at the beginning of the current school year.

The district expects to select a contractor for a $26.9 million Finch Elementary restoration and modernization project by this spring for work to begin next year, and it anticipates a spring 2014 start for a planned Hutton Elementary modernization, estimated at $28.8 million.

A Salk Middle School gym replacement project, budgeted at $14.5 million, is in the design phase with Spokane-based NAC|Architecture as the architect. It's scheduled to go out for contractor bids next spring and to be completed in the fall of 2014.

Renovations to the athletic facilities at Hart Field, near Jefferson, are budgeted at $2.5 million. That project is scheduled to go to bid next spring and will include improving the field, the field house, and athletic facilities there.

This past August, Spokane Public Schools announced that the district is on track for bond-funded projects to come in $47.9 million below budget, as the district has realized savings through lower-than-anticipated construction costs for bond-funded projects. For example, the Ferris project is now expected to have a construction cost total of about $59 million, but the project work originally was estimated at $71 million, the district says.

Because of the cost savings, the district has brought in new projects, including a $16 million classroom addition at North Central High School and a $9.4 million addition at Mullan Road Elementary School.

Under the bond measure, Mullan Road had been expected to receive $4 million in improvements to the roof, flooring, and heating, ventilation, and air-conditioning system, mostly for what's called the Comstock addition, which was moved to the school site in 1977. However, the district says the money could be used better if it was combined with the additional $5.4 million from construction cost savings to build a new classroom addition rather than update the old one.

Treva Lind
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