Interest rates hovering at a 40-year low of about 4% could help to set the stage for a successful new school bond program for the Glendale Unified School District, officials said this week.
"It is an attractive time to be borrowing and issuing bonds," said Chet Wang, managing director of Keygent Advisors, a financial consultant for the district.
Glendale Unified officials are looking to build on the success of Measure K, a $186-million bond approved in 1997 that funded the construction of Cerritos, Columbus and Edison elementary schools, and Daily High School.
The new bond would bring $270 million to the district over a 10-year span, money that would fund education programs and capital projects. The bond would be phased in around 2017 — just as the existing bond is paid off — and maintain local property tax rates at comparable levels, approximately $46 per $100,000 of assessed value, through 2050, according to a report to the school board.
Wang and colleague Gene Yee said there are six key factors to consider while developing the bond program, including the district's bonding capacity, interest rates, tax rates and projected growth. Using historic property values as a guide, they projected a $270-million take over 10 years.
Glendale Unified is taking a very conservative approach to its projections, said Eva Lueck, chief business and financial officer for the district. The model includes zero growth in property values for the next two years and 4.75% growth thereafter, and annual interest rates of 5.5% to 7%, she said.
"It is important to understand that when we are making the assumptions on the annual rate of growth and we put a zero in there for the assessed valuation for two years, that gives us the ability to see what the assessed valuation truly is and to structure our second series of bonds so that we meet that commitment of not going over the $46," Lueck said.
The discussion was a prelude to Nov. 16, when the school board will discuss the merits and drawbacks of issuing a new bond. The board is scheduled to vote on Dec.14 whether to put the measure before voters in April.
The bond requires 55% voter approval, but has already gained early support from district officials and community groups, including SOS Glendale, a grassroots group organized by parents in support of the bond measure.
An early community survey commissioned by the school district also found widespread support.
"It is a fabulous opportunity for the district and the community because we are able to invest in our instructional program and facilities in a significant way and not increase taxes to our homeowners," Lueck said.