School board approves resolutions for bond

The Sequim School District could access funds for capital projects as soon as late August.

At the board of directors meeting on Monday, Aug. 7, board directors unanimously approved two resolutions that allow the district to access a bond of $3.5 million of non-voted debt with a 1.71 percent interest rate from Zions Bank National Association based out of Salt Lake City, Utah.

Jim McNeill, bond attorney for the Sequim School District, presented the resolutions to board members for approval. The bond closes on Aug. 24, which is the date the district will receive the proceeds of the bond.

One resolution (08) authorizes the issuance and sale of the bond to the bank. This resolution sets forth the terms and conditions of the bond and acts as a contract between the district and the bank. The other resolution (07) establishes a registration system authorized by state law and required by federal tax law in order to ensure that interest received by the bank from the bond is tax exempt.

“When a school district issues a non-voted bond after voter approval of capital levy, the district is obtaining the money approved by voters up front and then using the capital levy tax proceeds to repay the principal of that non-voted bond,” McNeill said.

He stated the district, however, may not use tax proceeds from the Capital Projects Levy to pay the interest component due on the bond and that the interest must be paid from the district’s general fund.

McNeill noted many districts throughout the state have issued bonds like this, “for districts trying to access that money up front to start (their) projects rather than waiting until the district receives all of its capital levy tax proceeds on a pay-as-you-go basis.”

He reiterated that the proceeds from the bond will be used for renovating and expanding the central kitchen facility and include, but are not limited to, “upgrading and/or modernizing HVAC, electrical and fire protection systems; acquiring and installing new food service equipment; making site improvements; demolishing the 1950s portion of the community school building; renovating the district warehouse; adding additional freezer space and prep area; and making other capital improvements, all as deemed necessary and advisable by the board.”

McNeill said the bonds don’t close until Aug. 24 and at that point the bank will wire the money to the district on the day of closing and it will be able to use the proceeds at that time. He said the district will pay back the loan in three years and the maturity of the bond will last until June 1, 2020.

To view the agenda from the school board meeting on Monday, Aug. 7, visit https://www.sequim.k12.wa.us/Page/5013.

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