OGDEN — Voters approved the sale of $87 million in bonds to improve school buildings in Ogden School District in November 2018.
Thursday night, Ogden school board members voted to authorize the sale of the first portion of that $87 million — about $30 million in bonds, and no more than $33 million — that will be repaid over about 20 years.
“This is ... the first substantial step toward implementing the capital program represented by the bonds adopted last fall,” said Dale Okerlund, senior vice president at Lewis Young Robertson and Burningham, a municipal advisory and consulting firm in Salt Lake City.
Okerlund serves as a financial advisor to the board.
“The interest rate environment at the moment is quite extraordinary,” Okerlund said. “It’s very cheap to borrow money in terms of interest rate cost ... in the short end, it’s getting cheaper. So, in that way, it’s a good time to borrow money. That’s been true to one degree or another for the past decade. It’s particularly true at the moment.”
The bonds will actually be sold just under a month after Thursday’s approval, so it’s possible the market may change somewhat, Okerlund said.
There are three ways for the district to sell these bonds.
One way, direct purchase, is when a single lender, usually a bank, buys the entire bond issue, Okerlund said. The Ogden school board has previously sold bonds this way.
A “public offering” offers the bonds to the broad public for investment. This can be done by competitive sale or negotiated sale.
In a negotiated sale, an underwriter is selected in advance and knows that they will purchase the bonds and negotiates the price and terms. Then the underwriter communicates with investors, Okerlund said.
In the competitive sale, the bond offering document is sent to dozens or more bidders through a national system that provides the service, Okerlund said. The best offer of the bids is selected.
The Ogden school board has also used both of these options in the past.
“In this case, after some fairly lengthy discussions with (the district’s business administrator Zane Woolstenhulme) ... we’ve determined to use a competitive sale approach,” Okerlund said.
The district’s prior two public offerings were negotiated, Okerlund said.