Interest on proposed Iron County school bond projected to be $32M

Sign in front of Iron County School District offices, Cedar City, Utah, Sept. 20, 2018 | File photo by Jeff Richards, St. George News / Cedar City News

This story is the first of two providing some of the details of the $92 million general obligation bond proposed by Iron County School District. The second story will outline what’s at stake for the taxpayer and some of the issues surrounding the initiative.

CEDAR CITY – Voters will be deciding this November on whether to approve a $92 million general obligation bond that aims to fund a slate of school improvements including additional security and classroom space throughout the Iron County School District.

Here’s some of the background information you need to know ahead of voting on the ballot initiative.

The basics

District administrators have been working since the spring of 2016 with outside legal counsel, architects, accountants and bankers to gather information regarding the bonds in anticipation of putting the bond initiative in front of the voters this year.

The projects chosen to be included in the upcoming bond initiative were carefully selected by using a prioritizing needs assessment guided by a 10-year plan approved by the board last year.

The plan showed the need of our facilities,” Hunter Shaheen, energy and construction supervisor for ICSD, said. “It was a top-down report that laid out where our facilities sat in their current condition and what they needed, from roofing to seismic to plumbing, mechanical and electrical.

“The board then used that list to identify and prioritize the needs of the different schools. From there, we were able to address what we felt we could cover out of our capital project’s fund and what we help we needed from the public.”

The board adopted the resolution to put the bond initiative on the November ballot on July 9, following the full assessment of the district’s needs. The initiative appears on the ballot as Proposition 1.

If the measure is passed, the district is prevented from spending the money on teacher and administrative salaries or other school operating expenses. The fund must be used for the stated purpose outlined under the ballot initiative, which includes “the construction or acquisition of buildings, facilities, sites and related improvements and equipment and to improve existing buildings, facilities, sites and equipment.”

Under the district’s plan, the bonds will be issued in three phases beginning in 2019, the second in 2022 and the third in 2025.

The first bond is for nearly $26 million. Of that, $4 million is earmarked for security upgrades and video surveillance equipment in 15 of the district’s schools.

Security is an issue that has been in the forefront of our conversations for two years, but the question has always been how are we going to fund it,” Shaheen said.

The other $22 million will cover construction costs for remodeling and building additional classrooms at both Canyon View Middle and Cedar Middle schools, a new addition at Three Peaks Preschool and new tennis courts at Parowan High School.

The district has grown by about 1,000 students in the last 12 years with a traditional growth rate of about 2 to 2.5 percent. Last year, however, that number jumped to 4.5 percent growth, which administrators believe will continue.

We’re experiencing growth throughout the district but especially in our middle schools,” Iron County School District superintendent Shannon Dulaney said. “The remodeling and additional classrooms will help us alleviate some of the overcrowding that is occurring now.”

The second bond issued will be for around $35 million and the third approximately $30 million. These bonds will be allocated to replace Cedar City’s East and South elementary school buildings – both more than 60 years old. The cost of each new elementary school is calculated to be approximately $26.7 million per building, accounting for the bulk of the bonds.

“We have continued to maintain, fix and upgrade these two schools as much as possible but they are old, and we are limited in how much more we can do and how many more times we can fix things in them,” Dulaney said, adding an example of multiple repairs being done is the boilers in South Elementary, which, while safe, can’t handle “being fixed” many more times.

Included in the second bond are facility upgrades at Cedar and Parowan high schools, a parking lot upgrade at Canyon View High and a new preschool facility. These items are expected to cost around $9 million. There is also $345,000 set aside for future property acquisition.

Of the third bond, $4 million is tagged for upgrades to the district’s alternative high school and the existing district-owned office space for teacher training and professional development.

Estimated costs

Under the current bond tax rate of .001881 property taxpayers currently pay about $225 per year on a residence valued at $217,0000 and around $363 per year on a business property having the same value.

The ballot initiative seeks to increase this current bond rate by 7.39 percent for an anticipated increase of around $16 on a home with an assessed value of $217,000 and an estimated increase of $30 for a business property of the same value.

Under Utah law, the district has 10 years to issue the bonds and 21 years to pay off each phase, giving the district a total of 31 years to repay the entire amount.

Zions Bank Public Finance, the district’s financial adviser, has estimated the interest rates for the bonds as follows:

  • The first phase – 3.56 percent;
  • The second phase – 3.84 percent;
  • The third phase – 4.13 percent.

Assuming the interest rates come in as projected, the interest for the bond will be around $32 million, putting taxpayers on the hook for a total repayment of $124 million.

Resource

Email: tsullivan@stgnews.com

Twitter: @STGnews

Copyright St. George News, SaintGeorgeUtah.com LLC, 2018, all rights reserved.

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