The Oak Harbor School District sold $38 million worth of bonds this week in an effort to get an edge on inflation.
With the bond sale, voters will see an 85 cent per $1,000 assessed property value increase in property taxes. The new rate will be $2.58, which is under the state average of $3.85.
The bond sale took place four months ahead of schedule to take advantage of current market conditions. The remaining $16 million worth of bonds will be sold next summer.
The bonds sold this week will be paid off in 16 years while the bonds sold next year will be paid off in 13 years.
The school district had to sell the at two different times to comply with federal regulations. Vicki Williams, business director for the school district, said the school district is limited on the amount of interest it can collect from the bonds.
The bonds were sold at a premium, which means investors paid the costs and fees associated with the bond sale. This saved the school district nearly $1 million.
“We wanted to take the best advantage of the rising interest rates,†Superintendent Rick Schulte said. “By selling earlier, we have lower interest rates and pay less. We also have more time to invest the money before we have to spend it, bringing in more interest income which can go toward construction costs.â€
By investing the bond proceeds, the district will earn an estimated $4.3 million in interest through the life of the project. The money is expected to help offset double-digit inflation costs that have shown no sign of letting up.
A recent report by a national construction cost estimator says that inflation in Washington is expected to be at 10 to 15 percent from now until July 2007. That’s on top of the 24 percent inflation during the past two years.
The high school renovation budget includes a 30 percent cushion to account for three years of inflation and construction contingencies.
“Based on current inflation rates, this is going to be real tight,†Schulte said.
Reach Nathan Whalen at 675-6611 or nwhalen@whidbeynewstimes.com.
