Posted by Ed Petersen at 3/23/2017
What happens after voters approve a school district construction bond is a really fascinating process. Many people believe that once the property tax is approved, the district simply collects the money from the county treasurer annually, and uses that to pay loans acquired during the construction process. This assumption isn't far from reality, however the financing of school construction works a little differently than financing the purchase or construction of a home. Our Board of Directors unanimously approved Resolution 2017-01 on March 15th, which allows our superintendent or his delegates to issue and sell bonds to obtain financing for bond projects.
In order to obtain the debt financing required to carry out our construction projects, we must first sell what are called unlimited tax general obligation bonds in an aggregate amount that is not to exceed the $74 million approved by voters. This usually happens in several series over a few years as we have a requirement to spend the money earned from the sale of these bonds within a time period specified by state law. The process of selling these bonds is somewhat similar to stock trading on Wall Street.
We are working with D. A. Davidson, a company that specializes in this type of financing. They will purchase the bonds from us and then resell them to investors after setting prices and interest rates that make them attractive. This gives us the financing we need to build new schools!