A chance to save
Program would allow district to sell bond for little or no interest
By JESSICA KELLER
ARGUS OBSERVER
JessicaK@argusobserver.com
Saturday, November 21, 2009 9:32 PM PST
| |
| Ontario Middle School eighth-grade math teacher Jim Schaffeld (left) works out a problem with Elvis Beggs during class Friday. Ontario School District officials intend to pursue a grant that could save Ontario taxpayers a significant amount of money on a proposed $18.5 million bond for district-wide improvements if both the grant and the bond are approved. |
ONTARIO — A grant Ontario School District officials intend to apply for could significantly reduce the levy rate of a proposed $18.5 million school district-wide bond if both the grant and the bond are approved.
Ontario School District Superintendent Linda Florence gave a report on the Qualified School Construction Bonds program at Thursday’s meeting, which was met with enthusiastic support by the School Board members.
“All I can see is dollar signs in my eyes, and they’re the good kind of dollar signs,” Florence said during her report.
The Qualified School Construction Bonds grant, which is funded through the American Recovery and Reinvestment Act of 2009 and would be awarded through the Oregon Department of Education, would allow the school district to sell the $18.5 million bond, if approved in May, interest free or at a low interest rate because it offers investors a tax incentive to purchase school bonds, Florence said.
She said, right now, the interest rate for government agency bonds is 4.5 percent, but through this program, it could be anywhere from 0 to 2 percent.
Florence told the School Board, if the school district was awarded the grant, an interest-free rate could reduce the levy amount of $1.49 per $1,000 in assessed property value to a little more than 90 cents per $1,000. However, she said, investors may not want to purchase the bond with no interest rate and may require a 1 or 2 percent interest rate as an added incentive, which she estimated could bring the levy rate up to $1.05 or $1.10 per $1,000 assessed value or a little higher.
“Regardless, you’ve got significant savings there,” Florence said Friday. She also said the second advantage of the grant is it would reduce the length of time for bond payment from 20 years to 17 years.
The grant application does not become available until January, although the turnaround time is about two weeks for notification, but more details are pending from the state, including whether there will be a cap on the project amounts eligible for the reduced interest rate.
The state of Oregon has already gone through one round of the program thus far, and more school districts may apply in the second round, Florence said. In a press release issued from Sen. Ron Wyden’s office, the Dayton School District was the first public entity in the state to take advantage of the Build America Bonds program, which the Qualified School Construction Bonds program is tied to. The press release said the school district will employ up to 150 people in construction and save taxpayers an estimated $1.2 million in interest costs on a general obligation bond sale of $11.2 million.
Ontario School Bond Promotion Committee Chairman Ben Peterson said he was enthusiastic about the grant and pleased the school district intends to pursue it.
“I think there is still a little bit of hesitation with the timing of the bond with the economy still being down, but I think this definitely solidifies the fact we need to take advantage of this now to cut the cost,” Peterson said.
While a reduced levy rate may provide the added incentive for some Ontario residents who didn’t approve the last one in 2008 to vote yes in 2010, it may still not be enough for some.
“I would be happier if it got below a dollar, but the closer it gets down to a dollar the better,” Ontario resident Evelyn Sayers said. “I can’t say it would make me vote for it, but it would be a step in the right direction.”
Sayers, who did not vote for the last bond, said she is already paying higher taxes because of the library district and doesn’t want another increase on her taxes right now.
This grant opportunity, however, will only be available in 2010, and this may be the Ontario School District’s opportunity to reduce the cost of a bond.
But Ontario farmer Vic Easterly, who voted for the bond last year, said whether he votes for a new bond measure depends largely on whether he can afford it at the time. He said he hasn’t done as well farming in the past few years as he would like, and he imagines others feel the same way.
The Ontario School Board will discuss the grant opportunity again at next month’s work session.
Anonymous wrote on Dec 4, 2009 9:05 AM: