The Huron Valley School District (HVS) is refinancing its 2001 bonds by selling over $30 million in bonds to capture significant savings now that market conditions are ripe.
Like many Michigan school districts, HVS relies on proceeds from bond sales to make capital improvements to district facilities. When interest rates drop, the district takes advantage of the situation which results in a direct savings to the taxpayer.
While a resolution was approved in October 2010 to authorize the refunding process, the bond rate increased sharply shortly after and the refunding was put on hold. By May of this year the process started again and last month, the district executed a bond purchase Agreement with underwriter Stifel, Nicolaus & Company to purchase the bonds.
The HVS Board of Education will be asked to pass a resolution approving the bond purchase agreement — the ratifying resolution — at the Thursday, Aug. 11 board meeting.
Despite a drop in the state’s foundation allowance, Huron Valley has maintained its AA- rating.
“We have maintained our strong fiscal status during a very difficult financial period for the state and our schools,” said Superintendent Jackie Johnston. “Although we’ve had to make very tough decisions to maintain our financial stability, Huron Valley taxpayers will benefit by paying less in interest fees.”
The district has refunded bonds three times in the last in eight years, saving taxpayers over $7 million, according to HVS.
The present value savings of the refunded bonds is pegged at about $1.8 million or 5.93 percent of the refunded bonds; interest cost savings is roughly $2.6 million.