After reviewing current conditions in the bond market, the Mercer Island School Board voted Thursday night to ask local voters to approve bonds on the April 17, 2012 ballot to build an as-yet undetermined number of schools. A bond resolution must be filed with King County by March 2.
The board voted, 4-1, with director Dave Myerson opposing, to put a bond proposition on the April 17, 2012 ballot.
The move follows a in September to rebuild all of 's elementary school and middle school buildings, estimated to cost somewhere between $157 million to $177 million. The MISD is seeking to address school overcrowding and outdated buildings that don't support the district's vision, but school board has not yet reached an agreement on how many schools will be built or rebuilt. MISD Business Services Executive Director Dean Mack said the board would vote on plans no later than February 2012.
Senior Vice-President Trevor Carlson of Seattle-Northwest Securities (SNW)reviewed current bond options available to the school district at its Dec. 15 meeting and offered analysis for when, how much, and how bonding for the MISD could work out (click on the PDF of the report to the right of this story for more details).
According to the SNW report, the MISD's Bond Assessed Value currently stands at $8,068,610,924 and has legal authority to borrow up to 5 percent of that in a voter-approved bond — which is estimated at $386,660,546.
Thanks to a from various credit rating agencies, the MISD can borrow and extremely low interest rates: 2 percent for a 10-year bond, and around 3.5 percent for a 20- or 30-year bond issue.
Historically, spring elections have been the most favorable for school bonds, according to Carlson. From 1992-2011, voters passed 47 percent of bonds in the month of February and 37 percent in April. And between Feb. 2002 - Nov. 2011, the average April election voter checked "approve" 65 percent of the time.
The graph in the SNW report indicates, however, that voter enthusiasm for school bonds is currently at a low point. Only 5 of 31 bond issues offered to voters in 2011 (through Nov. 2011) were passed (16 percent). And all 12 bond measures on April 2011's ballot went down to defeat.
Mercer Island voters are generally supportive of school bonds, but also have limits. They rejected a $49.5 million construction bond to remodel four of five schools in 1990 and rebuild school. But they later approved several smaller bonds to renovate local schools that combined was much more than the original, single bond.
By law, 60 percent approval is required to approve school construction bonds.
Mercer Island's current school levy-rate in 2011 is $2.52 per $1,000 of assessed value, which works out annually to around $2,416 for the median single-family home (worth $958,800, according to the county assessor). The 21CFPC citizen's panel recommendation could, if paired with a bond described above, raise the school levy-rate to $3.42 per $1,000.
(Ed. Note: The version of this story was changed to include the board's vote to place the bond measure on the ballot, which was omitted in error.)