Fluvanna sells millions in bonds to finance school

It took more than two months of negotiating a rocky bond market, but Fluvanna County officials on Tuesday successfully sold $67 million in bonds to pay for county’s new $71 million high school.

The bond sale has twice been postponed since the original sale date of Sept. 25, which happened to be 10 days after the stock market plummeted, big investment banks went under and credit markets went into the deep freeze.

“I’m extremely happy that we’ve reached the point where [the high school] is going to be a reality,” said Charles Allbaugh, a Fluvanna County supervisor. “The next step is to go out to bid for construction.”

The latest bond issue will be paid off in 27 years at 5.95 percent, officials said. That is below the maximum 6 percent authorized by the county’s Board of Supervisors. The board is hoping to refinance the bonds at a future date for a lower interest rate.

“The [bond consultants] told us that the market is still pretty shaky and unstable and that bond sales are difficult to sell simply because of the economy,” Allbaugh said. “There’s a chance that, if we waited 6 months, the bonds would be selling at 6 or 7 percent.”

Bonds are like home-improvement loans. Government entities use the money for capital improvements and to cover operating costs until tax bills are paid. Entities essentially enter into an IOU agreement with the bond holder, promising to pay principal, interest and other fees in a set number of payments over time.

Tuesday’s bonds, in combination with more than $9 million in bonds previously sold, will pay for the high school, which officials hope will open in August 2011.

The existing high school was remodeled in 2002 for 1,000 students, but now serves close to 1,200, officials have said. The new school is designed to serve between 1,500 and 1,750 students with the potential to expand to 2,500.

The county plans to move middle-school students into the existing high school, move fourth- and fifth-graders into the middle school and leave kindergarten through third-grade students in the elementary school.

Allbaugh said officials hope the same economic pressures that made selling bonds more difficult will provide savings in construction costs as companies compete for business.

“We’re hoping that we can negotiate with the companies and bring the construction costs in under projects,” Allbaugh said.