Despite a crippled global economy of stock markets plunging, unemployment rising and houses not selling, Sedona Oak Creek School District successfully sold $25 million of bonds last week.

In its second of a three-part bond sale, the school district offered $25 million in bonds the first week of February, and quickly received over $75 million in orders.

“That shows they were an attractive sell,” SOCSD Superintendent Mike Aylstock said.

The district sold the first $25 million of the $73 million bond last year and plans to sell the last $23 million in February 2010.

There are few risks to bond holders, which makes school bonds attractive to investors and they are tax-exempt for Arizona buyers, Pinnacle One Project Manager Dave Young said.

When district residents voted to approve a $73 million bond in November 2007 for school construction, they were approving higher taxes in order to pay off the bonds, Aylstock explained.

The district’s secondary tax rate, which goes to pay off the bond, didn’t increase though since the district was just coming off of paying for a previous bond, Young said, so taxpayers didn’t notice a difference when the new bond passed.

The school district’s secondary tax rate is $0.70 per $1,000 of assessed value of property. A property worth $100,000 pays $7 in taxes to pay back the bond.

Financial institution Stone & Youngberg was able to underwrite the $25 million for the district, Managing Director Bob Casillas said.

The district received an A+ rating from Standard and Poor’s and an A1 from Moody’s, which allowed it to offer a true interest rate of 4.72 percent, he said.

“The district was able to catch a good window. It was a successful sale,” Casillas said.

Last year, State Farm Insurance was the bond’s biggest buyer, Aylstock said. He’s not sure yet who the big buyer is this go-round in the sale scheduled to close Thursday, Feb. 26.

Stone & Youngberg was able to make the bonds available locally and some were bought by Sedona residents, Casillas said.

“School bonds are repaid through local taxes,” he said. “In terms of the market, they’re really the most secured bonds to sell.”

Construction Plans for the $25 Million

With the latest bond sale, the $25 million will go toward Phase II construction projects.

Phase II focuses on Sedona Red Rock High School and West Sedona School.

This April, construction will begin for the $10.5 million Performing Arts Center at the high school, which is set to be finished by July 2010.

Another $2.7 million will go for the practice gym at the high school, which is also starting this April and set to be complete by February 2010.

At West Sedona School, Phase II includes construction of a new building for $3.3 million.

Both schools will receive energy efficiency projects for $4 million, which will mostly go to pay for solar projects that are still being designed.

Big Park Community School, which received all its projects in Phase I, will install solar panels in March.

Phase III will come with the $23 million bond sale in 2010.

The project is divided into phases for a couple of reasons, Young said.

“You don’t impact the taxpayers as much and you’re required by the IRS to spend the money within a period of time,” he said.