Flagstaff Unified School District’s bank account just increased by $25 million, following the sale of the first set of $75 million in bonds approved by voters in November.
The funds from the sale were deposited in the Coconino County Treasurer’s Office last week and will allow the district to move forward with its renovation projects and technology initiative.
In the coming years, Flagstaff residents could see a lower property tax rate than projected: the bonds fetched an interest rate of 2.13%, compared to the 4-5% used in the projections.
Specific property tax rates have not yet been determined, though.
“The tax rate will be what it needs to be to generate the amount of money to make interest and principal payments,” FUSD Finance Director Scott Walmer said.
Principal payments totaled $21,120,000 and will generate an additional $8.5 million in interest by the last maturity date, July 1, 2033. With premiums from investors included, the district has just over $25 million in its project fund available for use.
In November, 60 percent of voters approved Proposition 423, a $75 million bond program to support the district’s capital projects, including building repair and maintenance, bus and artificial field replacement, a one-student-per-device technology initiative and the replacement of one still to-be-determined school.
FUSD has three years to spend its first $25 million. The next bond sale is scheduled to occur in about two years, to align it with the creation of the new school.
In the last governing board meeting, Bill Davis, the managing director of Piper Jaffray, the district’s bond manager, said FUSD’s high credit rating, the second-highest possible, contributed to the low interest rates of the 10 bids for the bonds. The bid with the lowest total interest was accepted.
A report from Moody’s Investors Service states the high credit rating was due to factors including the growing tax base in northern Arizona and FUSD’s strong management team and low debt.
“Districts’ bonds are looked at very favorably from investors across the country,” Davis said.
Compared to other recent school district bonds sales within the state, though, FUSD received a preferable interest rate.
“There were three other districts, all within the Valley, who sold bonds in the same week or so as us, and our rate was preferable to any of theirs,” Walmer said.
This summer the district plans to demolish an outdated wing of Mount Elden Middle School and install modular classrooms. It will also renovate the bathrooms at Marshall Elementary and replace the Coconino High School football field and Flagstaff High School baseball field, artificial fields that have reached the end of their life cycles.
The district will also move forward with its technology initiative by purchasing iPads – priced at $400 per student – for every student in grades 6-12 as a starting point. Prior to the bond, device-to-student ratios were 1:9 for high schools and 1:6 for middle schools.
In the coming months, the tablets will be purchased, updated with appropriate programs and applications, catalogued and used in technology-specific teacher trainings before they are distributed to students in January.
“I want to express our appreciation to the district voters for authorizing the bonds. We’re really excited to continue to move our district forward with enhancements, facilities, technology and transportation. These are exciting times for FUSD,” Superintendent Mike Penca said.