Politics & Government
Schools to Consider Refinancing Bonds
The district's board will focus on two proposals to take advantage of low rates: One results in upfront savings, while another leads to greater savings over time.
Interest rates are again hitting notable lows and it's not just homeowners looking to refinance.
School districts are no exception: Coronado school officials are considering refinancing general obligation bonds that could save taxpayers millions over the life of bonds it issued in 2000 and 2002.
Municipal interest rates have dropped to nearly 3.5 percent, almost half of the 6.10 percent level of the bonds issued 12 years ago. The bond measure was approved by voters two years earlier, in 1998.
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The district still owes $13.6 million of the $17 million bonded debt, most of which was spent on renovation and construction projects at Coronado High.
Savings estimates range from $2.3 to $2.8 million, according to John R. Baracy, director of Stone and Youngberg, the district's bonding agency.
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There are a number of reasons Coronado is able to refinance at such favorable terms, he said, including the district's location in a wealthy community and its record of managing its resources well.
“The district has done an excellent job in a tough economic time,” Baracy said.
He credited Randi Allen, associate superintended for business services, for crafting solid budgets. He offered caveats as well, as the rates the school district could secure are dependent on market conditions around the world.
“If the Greek issue doesn’t go away, you’ll see a pop in rates. The bond market would react negatively to interest rates as well,” he said.
The governing board was offered two refinancing options at a Feb. 2 budget workshop. Board members are set to choose one at their regular Feb. 16 meeting.
The first frontloads payments so that most of the savings for taxpayers occurs between 2013 and 2016. The median home price in Coronado is $1.1 million, according to the district, leading to an estimated $118 annual savings in property taxes those years.
The second option stretches the savings over the life of the bonds, which mature in 2026. Over the same three-year period, the average taxpayer would save an estimated $85 annually, with additional smaller savings coming until the bonds are paid off.
The second scenario “captures greater interest over time,” Baracy said, “It gives you a bigger bang for the buck. The first would offer greater savings during a time when funding in general is low.”