MV School District saves money through bond refunding
The Mounds View School Board unanimously authorized the issuance and sale of general obligation refunding bonds, saving taxpayers $2.7 million.
“Interest rates continue to stay very low,” said Director of Finance Carole Nielsen. “When the right things line up, it’s in our best interests to refinance that long-term debt when it’s going to save us interest.”
The School Board at its Sept. 25 meeting authorized Springsted Inc., the district’s financial advisors, to solicit proposals for the purchase and sale of the bonds.
Bids were received by 10 a.m. Oct. 23. Don Lifto from Springsted presented the bid results.
He said the debt was issued in 2004, and the amount of the bonds that were sold total $2,760,000. The sale attracted seven bidders, and five to eight bidders is typical. Wells Fargo Bank submitted the winning bid.
When the debt was issued originally, it was issued at a true interest cost of 4.068 percent, which has since dropped to 1.94 percent, Lifto said.
When the School Board authorized the refunding on Sept. 25, Springsted estimated a net savings of $1.7 million. After tabulations, the actual savings is $2.7 million.
“On a percentage basis, that’s 7.9 net present value. … All your savings minus all your costs gets you to the net,” Lifto said.
“That’s 2.7 million dollars of taxes that your residents are not going to pay for payments on this bond between February 2015 and February 2024.”
Lifto added there are school districts that sit on refinancing opportunities and don’t make decisions, so they miss the chance for savings.