The full costs of bonds on Feb. 10 special election ballots in Clallam and Jefferson counties depend on the amount of interest paid during the life of the bonds.
Four bonds — each requiring a 60 percent supermajority to pass — are before North Olympic Peninsula voters in certain jurisdictions, as well as four levy proposals, which each requires only a 50 percent majority for passage.
Amounts of bond interest paid over the multiyear life of a bond are estimated since interest rates change over time.
The most recent estimate for the interest over the life of a proposed 25-year, $98.25 million bond to replace most of the Port Angeles High School is $55 million, figured at a rate of 3.43 percent.
For Sequim School District’s proposed 20-year, $49.26 million construction bond, the estimate is $31.5 million in interest payments, figured on a 4.98 percent rate as a worst-case scenario.
The 22-year, $34.8 million bond proposed by Chimacum School District is estimated to cost $22 million in interest payments. Like Sequim, Chimacum is using the more conservative 4.98 percent rate.
A proposed $3.6 million Port Townsend city bond to raise most of the money to repair Mountain View Commons is estimated to cost $1.46 million in interest over the 17-year life of the bond, figuring a 3 percent rate of interest.
This bond proposal differs from the school measures in that property owners would contribute for 15 years only.
Each school bond is expected to cost more than half of its face value in interest, said Jon Gores, managing director of the public finance division of DA Davidson & Co., bond underwriters for the three school districts.
Borrowers repay the debt over time with interest, he said.
It’s similar to the final cost on the mortgage on a home, but considerably less than a home mortgage because school and city bonds enjoy a lower interest rate due to tax-exempt borrowing status, Gores said.
Interest rates for bonds are not finalized until the bonds are sold, so conservative estimates are made to reduce the chances that higher than expected rates lead to larger payments than the revenue from projected tax rates, he said.
Gores said the full cost of each bond, including the interest to be paid on that bond, are figured into the tax rates.
“Because construction schedules do not call for the districts to have all of the funds right away, each district plans to sell its bonds, if authorized, in two or three sales, a year or two apart,” he said.
While it is difficult to estimate what the interest rate would be for the first bond sale, it is almost impossible to estimate the interest rate a year or two out, when the later series of bonds would be sold, he said.
“The school districts want to make sure the tax rate necessary to pay the annual debt service on the bonds is consistent with the tax rate communicated to the voters prior to the election,” he said.
The conservative estimate for the Port Angeles bond made last fall was 4.98 percent, or $84 million in interest.
Officials announced that interest rates had not increased as much as expected and so provided a lower estimate — while cautioning that the rate could change, particularly in later bond sales.
In Sequim, district officials are maintaining the initial higher interest rate as a worst-case scenario, said Brian Lewis, business manager for Sequim School District.
Chimacum School District is also continuing to work with the higher, more conservative interest rate, said Art Clarke, business manager and assistant superintendent at Chimacum.
Port Townsend City Manager David Timmons said the city is using the current rate of about 3 percent to calculate interest costs.
Port Angeles
The Port Angeles School District bond issue would cost an estimated $2.06 per $1,000 of assessed valuation, based on 2014 property values.
Two Port Angeles bonds costing a total of 46 cents per $1,000 of assessed valuation — one for the construction of Dry Creek Elementary School and another for the rebuilding of Jefferson Elementary School — will expire at the end of this year, meaning taxpayers would see a difference of $1.60 per $1,000 on their 2016 tax bills, rather than the full $2.06.
The Port Angeles schools two-year maintenance and operations levy, also on the ballot, would cost an estimated $3.26 per $1,000 of valuation.
Sequim
The Sequim School District’s bond would cost an estimated 63 cents per $1,000 of property valuation, or $126 a year for the owner of a $200,000 home.
Currently the district has a $1.61 per $1,000 maintenance and operations levy, for a total district tax rate of $2.23 per $1,000 assessed valuation.
The bond would fund replacement of Helen Haller Elementary School, Sequim High School expansion and renovation of buildings throughout the district.
Chimacum
The annual cost of Chimacum School District’s bond to property owners would be an estimated $1.51 per thousand per $1,000 of assessed property value.
If approved, the bond would fund expansion of Chimacum Primary School building to house preschool through the fifth grade under one roof, demolition of Chimacum Elementary School, construction of an athletic complex and several renovations.
Port Townsend
The city of Port Townsend’s proposed $3.6 million bond would cost property owners no more than 13 cents per $1,000 of assessed property value, beginning with 5 cents per $1,000 in 2016, and continuing for 15 years, not the 17-year life of the bond, city officials have said.
The bond would help to fund repairs of the complex, a former elementary school that now houses the city Police Department, municipal pool and a variety of nonprofits.
Ballots mailed
Ballots were mailed Wednesday from the Clallam and Jefferson county auditors’ offices, and must be returned or postmarked by 8 p.m. on Feb. 10.
In Clallam County ballots can be taken to drop boxes at the Clallam County Courthouse, 223 E. Fourth St., Port Angeles; the Sequim Village Shopping Center, 609 W. Washington St., near the city’s utility payment drop box in the J.C. Penney parking lot; and Forks District Court, 502 E. Division St.
In Jefferson County, ballots can be taken to drop boxes at Jefferson County Courthouse, 1820 Jefferson St., Port Townsend; and at Jefferson County Library, 620 Cedar Ave., Port Hadlock.
None of the five total Clallam County measures or three total Jefferson County measures is countywide, so only voters in the specific districts will receive ballots.
The Sequim school bond question will appear on ballots in both Clallam and Jefferson ballots since a small number of voters in the Sequim district live in the Jefferson County town of Gardiner.
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Reporter Arwyn Rice can be reached at 360-452-2345, ext. 5070, or at arice@peninsuladailynews.com.
