GILROY
– Before the end of today, Gilroy Unified School District will
be $50 million richer.
GILROY – Before the end of today, Gilroy Unified School District will be $50 million richer.
Assistant Superintendent Lee White confirmed that underwriter George K. Baum & Company will sell that amount today in the first round of the school district’s $69 million facilities bond approved by voters in November.
The initial funding will see GUSD through three years of heavy planning and construction as it implements a $150 million, 25-year facilities master plan.
“It’s very exciting when you can sell $50 million in bonds to improve facilities for students,” White said. “School districts don’t get to do this very often.”
GUSD officials are also excited about the low interest rates available to them in these rough economic times. The district is anticipating interest rates to be as low as 3.75 percent and no higher than 4.25 percent, White said.
“You are catching this at the lowest ebb in about 20 years,” City Manager Jay Baksa told GUSD officials at a joint meeting between the two agencies Monday night.
The available interest rates are low mainly to jump-start a struggling economy, but GUSD’s financial solvency also is at play. Both Moody’s Investor Service and Fitch Ratings give GUSD the industry’s highest credit rating for insured bonds.
For less expensive uninsured bonds, GUSD still ranks high. Both Moody’s and Fitch rate the district as “good” and “strong.”
Even though interest rates may not be this low for a while, GUSD cannot sell the entire $69 million of bonds. State and federal guidelines, White said, restrict the district from purchasing the full amount before a certain amount of design and construction is done.
Because school districts are funded largely by the state, school district credit ratings are tied to the health of a state’s economy. California is in the midst of budget cutting to help offset a $35 billion revenue shortfall.
“For a school district, these are very good rankings in this economy,” White said.
GUSD’s flagship facilities project is construction of a new high school, likely in the northwest end of town and scheduled for opening between 2008 and 2011. The bond will help cover a first phase of construction that will house 900 students. Additional funding will need to be secured to house the full 1,800 enrollment planned for the site.
GUSD wants to begin negotiations to purchase property as early as May 2. The district’s favorite of four potential sites sits off Day Road and Santa Teresa Boulevard just north of the city boundary.
