In 2012, the Grand County School Board decided to create a funding plan for aging buildings in the district. At the top of the list was the Grand County Middle School which needed a major remodel or to be replaced. Since then, every year the board has been freezing taxes and capturing the growth in our valley. One year ago, the board asked an independent consultant to assess the middle school. Their recommendation was to build a new school rather than to remodel the current building. A remodel would cost 75 percent compared to building new and would only extend the building’s life 15-25 years. Also, a remodel displaces students during construction, which is disruptive to the educational environment and adds cost to construction.
In October, the school board voted unanimously to create a Local Building Authority as the funding agent. In the last 10 years, school districts in Utah have used this method 32 times for construction projects.
Why did the school board decide to use a Local Building Authority (LBA) versus the traditional General Obligation (GO) bond method?
For one, the timing was right for using a LBA versus the GO Bond. The Future Building Fund has reached $2.1 million and will support a loan payment without raising taxes.
Secondly, it is anticipated that the Federal Reserve will be increasing interest rates at the end of December and there is further speculation for more interest hikes in 2019. The board thought it was crucial to lock in the bond interest rates before they begin to go up. The current GO Bond interest rate is around 3 percent and the LBA bond interest rate around 3.5 percent.
A third reason is that by using a LBA, construction could start as early as spring 2019. By going to a GO Bond, the earliest construction could start would be spring 2020. The current trends of commercial building costs show an increase of 10 percent a year. By delaying construction by one year, it could cost the taxpayers an extra $2-3 million.
The fourth reason is that the district could gain 6 percent in bond premium by using an LBA. By law, GO premiums are capped at 2 percent. The district stands to lose about $800,000 in premium by using the GO bond method.
The Grand County School Board has taken great care to create a plan to provide safe, educational and inspiring spaces for our students, while still trying to keep tax rates at a minimum. Please do not hesitate to contact your school board representative or the district office at 435-259-5317.
Grand County Board of Education