Kennewick School Board lays groundwork for $95M bond

Ty Beaver, Tri-City HeraldMay 21, 2014 

The Kennewick School District is laying the groundwork to possibly place a bond worth as much as $95 million before voters in a February 2015 special election.

The board heard from financial and legal consultants on a potential bond during a Wednesday night workshop meeting.

No action was taken by the board and the bond likely won't be discussed further until September.

However, it's important the board begin not only considering legal requirements and schedules but also understand what can be done to best ensure a bond's approval, consultants said.

District officials have discussed a bond between $85 million and $95 million in preliminary proposals. It would be used to pay for five projects -- construction of two new elementary schools and a new middle school and renovation of Westgate Elementary School and Desert Hills Middle School, said Superintendent Dave Bond.

Timing will play a big role in determining whether a bond will be approved by voters and how much it will cost taxpayers each year, said Jon Gores, managing director for financial management firm D.A. Davidson & Co.

Of the four possible election dates available in Washington during the year, election data show bonds that appear on February ballots are the most likely to be approved by voters, Gores said. However, they still face adversity. Only 40 percent of proposed bonds across the state have been approved since 2013 and only one out of 12 was approved in the recent April special elections

Interest rates for bonds spiked in the past year but are in a slight decline to just above 4 percent, thanks to international politics, Gores said.

"(Vladimir) Putin has done more to lower interest rates than (Federal Reserve Chairwoman) Janet Yellen," he said.

How much a voter-approved bond would cost taxpayers depends on its value, but at $90 million -- halfway between the low and high proposals -- it would cost a taxpayer with property assessed at $200,000 another $62 a year in property taxes, Gores said. That would be on top of the roughly $59 million in bond debt already being paid down by district residents and will cost that same property owner about $300 this year.

It's important the board make sure voters are properly informed about how much the bond is for and how much it will cost, Gores said.

However, pointing out that the state will likely kick in millions of dollars if the bond is passed, that a portion of property taxes can be written off on federal taxes and some senior citizens may be exempt from paying the tax increase could help sway voters, Gores said.

How the bond is described also is crucial, said Jim McNeill, a bond attorney with Foster Pepper. The board will want to succinctly and accurately describe the projects and where they'll be built, but use language that resonates with voters, he said.

"It's always tricky," McNeill said. "It's a fine line to walk."

A final decision on whether to pursue a bond and for how much will likely be needed by the end of November to safely assure an election in February, Bond said.

-- Ty Beaver: 509-582-1402; tbeaver@tricityherald.com; Twitter: @_tybeaver; Google+: +TyBeaverTCHerald

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