The Issaquah School Board voted unanimously last week to approve the sale of $60 million worth of general obligation bonds after a morning of “Bonds and Breakfast,” as they called it.
“It went very well, and it went very quick,” Trevor Carlson of Seattle Northwest Securities said. “We’re selling into a nice strong market. Only the day before, the market was the opposite.”
The market is still experiencing rates that are near historic lows, he added.
This was the third installment of the $241.9 million bond issue that was approved by the community on Feb. 7, 2006.
The district was able to put the entire $60 million in the general construction fund by using premium bonds.
Premium bonds are those bonds that a buyer pays more than face value for, Executive Director of Finance Jake Kuper explained.
Since these bonds are considered high quality debt, Kuper said, it is a good investment to add to a portfolio or for a short term cash use.
The interest rate on the bonds this time around was 4.5 percent, only slightly higher than the previous two sales, which were in the low 4s.
Bonds are similar to getting a home loan — the amount you get doesn’t change regardless of when you buy, but the interest rates are constantly fluctuating.
“This was a really opportune time,” District Spokeswoman Sara Niegowski said.
The district opted not to insure the bonds, since many of the bond insurers do not currently have a higher credit rating than the Issaquah School District’s.
“Bond insurance is like life insurance for debt,” Kuper explained. However, since the district’s rating is so high the cost was not worth the benefit of insuring the bond. The district would not have saved any money.
The district is using the State Bond Guarantee, which gives the buyer of the bond another level of protection. If the district defaults on its loan, the state will pick up the tab.
With the new bond sale, the district will not go over its target tax rate of $3.97 per $1,000 assessed value.
In other school board news, the board decided to renew its contract with Superintendent Steve Rasmussen. His new contract runs from July 1, 2008 to June 30, 2011. The final wording of the contract will be approved at the meeting on June 25.
All of the board members took time to congratulate Dr. Rasmussen on his first year.
“Not trying to have a lovefest here, but the results speak for themselves,” Board member Mike Winkler said at the end. “You have a set a high bar to fill your own shoes.”