The Lindbergh School Board has approved selling more than $9 million in bonds—a measure they hope will save taxpayers more than $600,000 by refinancing bonds issued in 2003.
The board unanimously approved a resolution setting in motion the bond refinancing during its meeting on Tuesday night at the Early Childhood Education Center.
Lindbergh Chief Financial Officer Pat Lanane said the outlook for savings has improved since the board first voted to move forward on the plan in November. At that time, the district expected to save taxpayers $500,000.
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The current savings look “wonderful,” Lanane said. “These savings are accrued directly to taxpayers. These are taxes they will not have to pay in the future.”
This will be the sixth time the board has refinanced bonds since 1998, and Lanane said those measures saved taxpayers $3.8 million through lower property tax rates. The district refinanced bonds in 1998, 2001, 2004, 2008 and 2010.
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The Lindbergh School District intends to sell $9,070,000 in general obligations bonds to pay off debt remaining on $14 million in bonds voters approved in 2003 to fund construction projects throughout schools in the district. About $8,905,000 of the newly minted bonds is expected to pay the remaining principal of those bonds issued in 2003.
To do so, though, the district will be using a financing tool known as “advance refunding.” Essentially, the district will be using the proceeds of the current bond sale to purchase federal government securities.
The principal and interest from those securities will pay the principal and interest on the 2003 bonds until those bonds can be retired in March 2013—eliminating those bonds and leaving taxpayers to repay the newly issued bonds.
In the end, the board hopes the financial maneuvering will save taxpayers about 6 percent in interest costs until the bonds mature in 2023. The savings may vary dependent upon the bids to purchase the bonds, however, the resolution approved Tuesday states the district can reject any bids should the savings not reach at least 3 percent in interest costs.
Lanane previously said he would advise the district to pursue refinancing even if anticipated savings were about $250,000. A school district can only refinance bonds once through the life of the bonds.