December 23, 2009

Dear Residents of ISD #108:

On December 1, 2009, the voters of our district passed a bond election giving the district the authority to sell bonds for $10,200,000 to complete projects at the Elementary and Middle/High Schools. It was understood by the district and information relayed to the public that these bonds would carry an interest rate of 0%. Since the time this program was instituted, the Federal Treasury has dropped the tax credit on these bonds from over 8% at the start to the rate currently under 6%. As a result there have been no buyers for these bonds without a supplemental interest coupon attached.

Our District faced the same issue, with no apparent buyer for the 0% bonds without a supplemental coupon. There were two priorities when possible solutions were examined by our governing board 1) complete the projects as presented to the voters, and 2) keep the yearly tax impact at the exact level or lower than what was presented to voters in the information provided by the district. The solution that was arrived upon by the district was to solicit bids for the bonds and keep the tax impact at the same level by lowering the deferred maintenance levy the district is allowed by the amount increased by the interest coupon attached to the bonds.

Put simply, the district will reduce our deferred maintenance levy by approximately $30,000 per year to keep the tax impact on the patrons of the district equal to what was presented by the district. The bonds were sold with a supplemental coupon of 1.26%. This will allow a portion of the deferred maintenance levy to be utilized to continue to upkeep buildings. The Federal Treasury also sets the terms of the bonds, and the term has increased from 15 to 16 years.

The board discussed options at length before reaching this solution to this late occurring issue with the bonds. The district thanks you for your continued support.

Respectfully,



Brian Corlett
For the Board of Education