School bond sale and refinance yield savings

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School bond sale and refinance yield savings

On September 13, 2016, the Hood River County School District (HRCSD) closed on the sale of $57.2 million of voter-supported bonds. In part because of the District’s strong financial stewardship and associated enhanced AA+ bond rating, investors purchased the bonds at a premium. On average the bond coupons sold on the market for 14.5% more than asking price, resulting in an additional $8.5 million to the school district, all while staying within the estimated target tax levy of $1.83 per $1000. Conditions factoring into the higher value offered for the bond coupons by investors include: excellent financial performance of the District over the last three years, an enhanced AA+ bond rating, as well as favorably low interest rates in the days leading up to the bond sale. The District’s bonds were sold with an all-in true interest cost of 2.49% and netted $65,420,413 to address deferred maintenance, classroom space needs, academic program enhancements, technology infrastructure, and safety enhancements.

HRCSD Chief Financial Officer Saundra Buchanan remarked, “After many months of coordinating efforts with underwriters, bond rating agencies, legal counsel, banks, and the Oregon State Treasury, I am pleased to report to our community that we had an excellent outcome in selling our bond.”

This past June, in addition to authorizing a resolution to issue $57,175,000 of general obligation bonds, the HRCSD Board of Directors also moved to refinance $8,755,000 of the outstanding Series 2008 general obligation bonds. This planned refunding issue will save taxpayers approximately $694k over the remaining life of the bond, providing a lower overall tax rate for the community.

“These savings will mean lower taxes for our neighbors and are a compliment to the strategic efforts and hard work of Superintendent Goldman’s administrative team,” commented School Board Chair Mark Johnson. “The entire school board is eager to provide improved facilities for our students and our entire community in the months and years ahead.”

The additional funds from the bond sale will provide a cushion to ensure all Bond Projects are completed as promised. However, it is the District’s goal to manage the project budget so that the extra funds can address additional facility needs identified though the school district’s Facilities Master Plan, finalized in April 2016 with input from over 350 community members.