School Bond Proposed

Racheal Moore, Reporter
Rich Civic Times

RANDOLPH, Utah.  July 18, 2018. Perhaps the most interesting and lengthiest subject of Rich School Board was focused on the proposed Rich County School District bond election.  John T. Crandall of George K. Baum Company, an investment banking firm and Brandon Johnson of Farnsworth Johnson PLLC, bond attorney were presented to discuss the bond election and answer questions prior to voting on the resolution providing for the holding of a bond election to be held November 6, 2018. 

If approved by eligible voters at the bond election, the board intends to issue general obligation bonds in an amount not to exceed $8,500,00, in one or more series at one or more times.  The general understanding is that the money is intended to fund a new school gymnasium and additional classrooms, though the planned expenditure was not discussed during this particular board meeting.

If passed, an annual property tax increase will be incurred over the period of 21 years.  It is estimated that the increase for a  primary residential property value of $156,000 will be $35.77 for residences and $79.78 for business properties and non-primary or secondary residences.  Non-primary or secondary residence owners do not get to vote on the bond but will be directly impacted by the outcome if affirmed.

It should be noted that there is already a bond election that was passed previously and which is still being paid off.  The final principal payment on that is due June 2023 and is approximately $350,000 a year.  In 2019 this will be about $353,000. If the bond passes, debt service for the old bond will continue through 2023 varying at around $353,000 per year as scheduled and simultaneously in 2020, debt service for the new bond will begin at approximately $300,000 for a combined total of about $650,000 per year.  

In 2024, as the old bond is paid off, the new bond debt service will increase to a variance of around $650,000 until the amortization ends in 2039.  The amortization schedule is based on current rates.  It should be expected that if the bond passes and later bonds are purchased the following January, rates are likely to have increased which may affect the estimated property tax increases.

However, there is a state bond guarantee which provides an AAA rating for the bonds which would drive down the cost of capital and which also guarantees the state will cover the bond for investors if the school district has trouble funding the debt service. 

If passed, the school district will have 10 years to issue bonds.  If grant money is obtained after the fact, the money can be used for something different, or for paying off bonds.  There is no penalty to pay off early.  Construction cost inflation can be a concern, however, Hughes Construction was reported by the board to feel good about covering the cost at $8.5million, as they built inflation into their estimates.  Construction costs are going up anywhere from 15% to 25% said Crandall.

The resolution is required by state law, and a two-thirds majority is required by the voting members of the school board.  Discussion ensued regarding some of the requirements of the resolution such as proper notification to voters regarding the election, voter education and information, and public notice requirements.  It was emphasized that information can be provided to the public, but public funds cannot be used to market the bond or sway voters.  The vote on the resolution was taken and approved 5-1.  Bryce Huefner dissented.  Eric Wamsley was not present at the meeting, but his ‘aye’ vote was relayed by Scott Sabey