NHUHSD Paying $2M For $200K Bond – December 10, 2012
By Jack Durham
The Northern Humboldt Union School District Board of Trustees will hold a special study session Tuesday, Dec. 11 to discuss school bonds. The public meeting begins at 5 p.m. in the McKinleyville High School Multi-Purpose Room.
Later that evening, the board is scheduled to vote on obtaining more school bond financing to build a performing arts center at Arcata High as authorized under Measure Q, a $25.8 million bond measure approved by voters in 2010.
Bonds became a hot topic after Hank Sims of the Lost Coast Outpost website broke a story Nov. 30 about local school bond financing and the high rates paid by some districts. Sims referenced a report in the Los Angeles Times about capital appreciation bonds and how much they can cost school districts.
Last year the NHUHSD obtained $195,223 in bond financing for school repairs and upgrades. The district will pay off its capital appreciation bonds over a period of 25.4 years, meaning it will pay $1,975,000 for less than $200,000. That’s 10.1 times more than the amount acquired for school repairs.
However, that represents only a small potion of the district’s Measure Q bonds. Th district has obtained a total of about $8 million in bonds so far for upgrades at McKinleyville and Arcata High schools. The district will spend a total of about $17.4 million by the time is pays off the principal and interest on the $8 million. That’s a ratio of less than 2.2 and is considered relatively low for bond financing.
According to “government finance experts” cited by the LA Times, the ratio should be less than four with regard to how much the money ultimately cost the district.
The district has spent a portion of the bond financing upgrading emergency communications systems and electrical wiring at McKinleyville and Arcata High schools. The district hopes to use the rest of the money next summer building new bleachers at Mack High and upgrading restrooms and libraries at both schools.
After its study session Tuesday, the board will reconvene for its regular meeting at 7 p.m.
The board is scheduled to authorize the issuance and sale of general obligation bonds. These would pay for a performing arts center at Arcata High, as promised in Measure Q. The project is estimated to cost $5 million to $6 million.
NHUSD Superintendent Kenny Richards said in an interview Friday that if the board approves the bonds, district staff would then go shopping for the best bond rates. It’s unknown what those rates will be until that process is underway.
“Financially speaking, this is a great time to get bonds,” Richards said, noting that rates are low.
Also at Tuesday’s meeting, the board will elect a new president, a new clerk and will decide the day and time of its regular board meetings for the coming year.