In November 2019 Hermiston voters approved school bond measure 30-130, authorizing Hermiston School District (HSD) to sell $82.7 million in capital construction bonds. Partnering with Piper Sandler, formerly Piper Jaffray, the district’s bond underwriters, HSD priced the bonds on March 31, with a final closing scheduled for April 9.
As part of the sale, the district will realize an additional $1.7 million in bond premium, which will go to support the full package of construction projects, which include:
- Replacing Rocky Heights Elementary School with a larger 600-student building
- Constructing a new 600-student elementary school on Theater Lane
- Constructing a multi-classroom annex to increase capacity at Hermiston High School
- Purchasing property for long-term anticipated student capacity demands
In addition to the $82.7 million November-approved bonds, the district refinanced $2.8 million of a 2010 bond issue from the 2008 voter authorization, resulting in an $85.5 million total sale. Refunding the 2010 bonds yielded a net present value savings of $382,448.74.
The state of Oregon previously required districts to prove a savings of 3 percent to qualify for refinancing. While that requirement is no longer in effect, the district’s savings of approximately 13.64 percent, far exceeds that prior expectation. In planning for the bond and projecting figures, HSD staff along with their financial experts, estimated the bonds would carry $108 million in interest. At closing, total interest costs were determined to be just $57.9 million, reflecting a savings of over $50 million or 60 percent of the bond amount.
The district secured this savings with its strong Standard & Poor’s Global reaffirmed AA- (double A minus) credit rating and the market value at the time of the sale. Hermiston voters are expected to see the district property tax levy rate for the bonds to remain steady at approximately $3.65 per $1,000 until 2030.
Rates are expected to drop to approximately $2.16 per $1,000 after that, which is almost a dollar less than the earlier projected $3.15 per $1,000. Final maturity of the bonds is set for June 15, 2045.
