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Show High interest rate hurts school bonding Because of increases in interest rates, the selling of bonds for school building is becoming unattractive to buyers, and may hurt building projects' in Uintah County. With the constant population increase in the county and the threat of a population boom, the Uintah County School Board has been considering building projects which could call for a bond issue as high as $16 million. Because cf the present trend in interest in-terest rates, finding buyers for bonds could be impossible, reported Dan Turner, board clerk. On Febraury 15, says a report by Borrows, Smith and Company, the Federal Reserve Board increased the rediscount rate which banks pay to borrow from the Federal Reserve Board to 13 percent. "At this time the bond market virtually vir-tually collapsed into what is the most difficult period witnessed during the writer's 25 years in municipal finance," continues the report. "Because of the present condition of the bond market," Turner told the school board, "if we were to bond today, there would be no buyers of the bonds." He explained that the maximum rate the district can bond for is 8 percent interest which doesn't attract buyers when the prime rate is as high as it is. So far, all Utah bond issues offered have received bids, but exceptional efforts have sometimes been required to keep bidding syndicates from falling apart, and local banks have purchased some issues not otherwise saleable. Despite the future problem the board may face in selling its bonds, it was recommended to continue with building plans, go ahead with passing the bond issue and hope they will sell. "We may be looking at double sessions," said Superintendent Wayne Reid predicting what would happen if there are no buyers of future bonds. |