ITEM NUMBER: 6.C.
School Board Regular Meeting
- Meeting Date:
- 10/04/2021
- Prepared By:
- Tom Sager
Item Type:
Action
Subject:
Approval of Refunding 2015A Bonds
Background:
During favorable market conditions with low interest rates on the cost of borrowing, school districts can take advantage of refinancing existing debt to lower debt service payments and save money for property tax payers. Most recently, the district did this in September 2020, and in doing so saved taxpayers $3,500,000 over the term of the payment schedule.
Since that time, the district has continued to work closely with the district’s financial municipal advisor, PMA, to monitor any other emerging opportunities. Information on this topic and a market update was shared with the board finance committee in June 2021.
At this time, the district has another opportunity to refinance a different bond series at a lower interest rate and again save money for taxpayers. Originally, this was the series 2006A General Obligation bonds that were issued as a result of a voter approved referendum in November 2005. The $6,000,000 in proceeds were used to finance the betterment of several school sites and facilities.
The current interest rate on this series is 2.19 percent. The estimated true interest cost on refunding these bonds is 1.54 percent. This includes the cost of issuance. The total savings to taxpayers will be $27,000. While this savings is not as substantial as the savings incurred last September, it does represent the district’s vigilance and commitment of leveraging every opportunity to save money for property owners.
Tonight’s recommendation for approval is the first part of a two part process. Tonight, administration will recommend the board approve the parameters set in the attached resolution for the bond sale, and authorize the Superintendent/Director of Business Services and a Board Officer to execute a Bond Purchase Agreement for the stated purposes. The second part of the process will occur at a school board meeting in November when the board will ratify the resolution for the award of the sale, anticipated to occur in October.
Since that time, the district has continued to work closely with the district’s financial municipal advisor, PMA, to monitor any other emerging opportunities. Information on this topic and a market update was shared with the board finance committee in June 2021.
At this time, the district has another opportunity to refinance a different bond series at a lower interest rate and again save money for taxpayers. Originally, this was the series 2006A General Obligation bonds that were issued as a result of a voter approved referendum in November 2005. The $6,000,000 in proceeds were used to finance the betterment of several school sites and facilities.
The current interest rate on this series is 2.19 percent. The estimated true interest cost on refunding these bonds is 1.54 percent. This includes the cost of issuance. The total savings to taxpayers will be $27,000. While this savings is not as substantial as the savings incurred last September, it does represent the district’s vigilance and commitment of leveraging every opportunity to save money for property owners.
Tonight’s recommendation for approval is the first part of a two part process. Tonight, administration will recommend the board approve the parameters set in the attached resolution for the bond sale, and authorize the Superintendent/Director of Business Services and a Board Officer to execute a Bond Purchase Agreement for the stated purposes. The second part of the process will occur at a school board meeting in November when the board will ratify the resolution for the award of the sale, anticipated to occur in October.
Recommended Action:
The administration recommends that the School Board approve the attached resolution authorizing the Superintendent/Director of Business Services and Board Officer to execute a Bond Purchase Agreement. The bond sale will occur in October 2021.