Provo school bonds refinanced

PROVO — The Provo School District is issuing bonds to build new schools and to refinance previously issued bonds.

The district refinanced $8.1 million in bonds originally sold in 1997 at a new interest rate of 3.81 percent. With the new interest rate, the district will save $352,700 over the course of repaying the bonds.

The interest rate on the original bonds ranged from 4.61 percent to 5.1 percent.

The bonds were initially issued to build Centennial Middle School, Spring Creek Elementary and an expansion at Amelia Earhart Elementary.

The district originally issued $20 million in bonds for the projects and in the past 10 years has paid off all but about $8 million of the debt.

The new bond issuances will be repaid in 2015, "the same repayment date as the original bond issuance," business administrator Kerry Smith said.

The district refinanced the bonds by issuing new bonds, and with the new bond money, paying off the original bonds.

The district announced on Jan. 31 in a private offering to issue new bonds for a refinance.

Chase Manhattan Bank will purchase the bonds. It provided the lowest interest rate (3.81 percent), lower than the market rate of 3.85 percent.

By keeping the offering private, the district was able to save costs by not having to seek a new bond rating, Smith said.

The most current bond rating was announced in the fall. Moody's Investors Service gave the district a bond rating of 1A. Bond ratings range from AAA to B.

Next month, the district will seek another bond rating for the issuance of $25.6 million in bonds.

The money from the bond issuance will pay for the building of an elementary school in the Lakeview neighborhood and the rebuilding of Timpanogos Elementary.

Last June, voters approved the district to issue over the next three years $35 million in bonds for new construction and remodeling of existing schools.

"We're accelerating Lakeview to beat the construction inflation," Smith said. "We'll be true to what we promised taxpayers, and we won't accelerate the tax rate at all."

Property taxes on a $200,000 house will increase over the next three years to $82.

Despite issuing all $35 million in bonds within 12 months, the district will spread the tax increases over three years by paying off less of the principle of current debt and through increase valuations of properties in the city.

In addition to a tax increase for the bond issuance, the voted leeway will increase.

On a $200,000 house, taxes will increase $48 by 2008.

The Lakeview neighborhood elementary is expected to be ready August 2008.

Timpanogos Elementary is expected to be ready in January 2009.

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E-mail: lhancock@desnews.com