by Jonathan Weaver
Armstrong School District will realize more than $500,000 in savings on financial bonds taken out 10 years ago.
Chris Brewer, of Dinsmore and Shohl – who represents the district as part of their bond counsel – explained to school district board directors during their open caucus session the recommendation to constitute a debt ordinance and create a sinking depository as they had done unanimously in January.
“Toward the end of 2012, you passed a resolution like this that allowed us to refund your 2003 bonds, and then in January of this year, you passed a resolution that allowed us to refund a portion of the 2006 bonds. Those are the bonds that financed improvements at Lenape Elementary – with that issue itself about $14 million,” Brewer said.
In February, bond counsel and Piper-Jaffray Senior Vice President Randy Frederick re funded the maximum-$10 million allowed by federal tax code allowed. Brewer explained that code instituted in 1986 was imposed to try and give smaller governments better finance rates.
“Piper-Jaffray refunded in that `06 issue your longer-term bonds – the ones that had the richest amount of savings to try and obtain, and the rates were very attractive to do that,” Brewer said.
They ended up with a five percent savings – which equates to about $500,000.
Though 2013 rates have become unpredictable, Frederick and other investors watch the market closely and will advise school administrators when the market is hovering near the two-percent limit imposed.
With Tuesday’s debt ordinance, bond counsel will oversee the remaining $3.5-4 million to try and incur additional debt relief. Brewer and Frederick equated the marketplace similar to a home mortgage for the audience.
“This is like the Dow Jones – this is not where your interest rates are. It just shows you the trend in the marketplace,” Frederick said.
Frederick said that savings will not be $500,000 due to the smaller amount of money left, but that the district could see a savings of $70-80,000.
“Now that the remaining debt only has eight years to run, there’s only so much you can save,” Brewer said. “If you don’t do anything, you’re out of debt anyway in eight years.
“But If we get something, something’s better than nothing. $70,000-80,000, that (might be) two new teachers.”
Though last night’s resolution was signed, officials still do not know when will be a good ‘trigger’ for the transaction and said there is additional background work to be completed first.