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About The independent. (Vernonia, Or.) 1986-current | View Entire Issue (Jan. 15, 2009)
Page 12 The INDEPENDENT, January 15, 2009 Banks School Board hears good news at January 12 workshop “I have good news that will save us some money,” said Su- perintendent Marv Ott as he in- troduced Javier Hernandez of Seattle Northwest Securities (SNW) to the Banks school board at the January 12 work- shop preceding their board meeting. Hernandez told the board that they have an unusu- al opportunity to create signifi- cant savings to the district by refinancing general obligation Just the finest in collision repair No Custom Work CHERRY PRODUCTS Auto Body & Paint 1875 E. Baseline Cornelius 503-359- 5993 bonds within a 90-day window that begins March 3. According to Hernandez, market forces and timing have created a “perfect storm.” Trea- sury bonds, with traditional re- turn rates of 4–5 percent, fell dramatically in 2007, so in- vestors turned to the municipal bond market to maximize se- cure interest earnings over time. As recently as October 2008, bonds were selling at nearly 5 percent, but Hernan- dez quoted a current rate of about 3.2 percent. Bonds are guaranteed repayment at the rate sold, so selling bonds at the lowest possible rate saves the district money. The district has outstanding bonded debt of $6,330,000 at an average rate of 4.54 percent resulting in debt service of over $332,000 in the current school year. S TRASSEL ’ S A UTO R EPAIR & H YDRAULIC H OSES 2-4-6 S PIRAL W IRE S UCTION H OSES A DAPTORS - 3/16” TO 2” A MERICAN & M ETRIC F ITTINGS B ULK O IL P RODUCTS 276 S UNSET , B ANKS 503-324-9808 MS170 Chain Saw Action by the board in 2006 created debt service savings of nearly $300,000 by replacing existing bonds with a 2007 re- funding bond. Generally, this type of “prepayment” is allowed only once, unless it occurs within a particular 90-day win- dow. According to Hernandez, the district could realize addi- tional savings of over $500,000 in debt service by issuing Gen- eral Obligation Refunding Bonds, Series 2009, in an esti- mated amount of $6,555,000. Though the Banks district did not approve a new bond in November, several large dis- tricts did win approval and will begin selling bonds in March and April. Hernandez told the board that he believes that the district could begin offering bonds for sale in February be- fore these larger districts flood the market, thus securing a rate closer to three percent. The ex- penses of bond counsel and SNW would be incurred only when and if the bonds are is- sued and would be included in the proposal. Cost to the district in the current budget, with the exception of $300 payable to the State Treasury for bond preparation, would be nearly zero. District revenue comes pri- marily from property tax dollars distributed by the state accord- ing to a formula based on the number of students. The board sets the rate of property taxes (levy) annually, to balance an- ticipated revenues and expen- ditures, including debt service. Property tax limitations require voter approval for significant in- creases in the rate. In 2008 the dollars per $1,000 assessed value ($/$1000 AV) dropped to almost one-half of the percent- age levied in 2001, which was over $3/$1000 AV. Hernandez projected a levy of approxi- mately $2/$1,000 beginning in 2013 to repay 1998 general ob- ligation refunding bonds. The district may choose when to apply debt service sav- ings. Spread over the life of the obligation, the proposed 2009 issue could save taxpayers $.14 – .15/$1,000 AV. However, according to Hernandez’ report, “Debt service savings can be distributed in different ways de- pending on the District’s strate- gic plans to add new debt is- sues in the future.” Concentrat- ing and/or delaying the applica- tion of debt service savings could reduce the levied amount by as much as $1/$1,000 if ap- plied in a single budget year. School board discusses bond options Banks school board had a busy January 12. A workshop presentation by Seattle North- west Securities started deliber- ations on a more positive note than other recent meetings. Hearing about significant sav- ings (See related article) was welcome in this time of eco- Starting at $179. 95 Includes many of the same excellent design features as our professional models, including STIHL Quickstop® inertia chain brake, Master Control Lever™, anti-vibration system, easy-off filter cover, and view-through oil and gas tanks. nomic stress and the failure of the bond measure. The board unanimously approved a reso- lution allowing the district to re- finance general obligation bonds in order to secure sav- ings in debt service. School board appreciation month was marked by a dinner prepared by Lance Heggem, Sodexho Food Service manag- er, and certificates of apprecia- tion were presented by Super- intendent Marv Ott. As always, the board and the audience were charmed by the presenta- tion from sixth-grade outdoor school students about their ex- perience at Camp Westwind. At the board workshop, Ryan Birr, chairman of the Fa- cilities Planning Committee (FPC), presented the “final and complete recommendations.” Last month the board asked the FPC to review the scope and budget of capital projects that would have been funded by the $25.5 million bond. The com- plete text of Birr’s letter to the board is available on the Dis- trict website, and it is exten- sively quoted here. 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