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The Press Newspaper

Toledo, Ohio & Lake Erie

The Press Newspaper

The Press Newspaper

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With interest rates hovering near historic lows, the Lake school board is once again reviewing its options for saving money by refinancing the bonds issued to pay for the construction of the middle school building.

The district issued bonds in 2001 for the construction of the school after voters approved a levy that generated about $14.8 million. The new school replaced a 78-year-old building used for a junior high school.

When the district refinanced the bond issue in 2007, it saved a little more than $1 million, Jeff Carpenter, district treasurer, said last week.

Now, Carpenter and the board are weighing their options to again find additional savings.

Carpenter is estimating a savings of about $705,000 were the district to refinance now.

“Our issue is we really can’t do anything to refund those bonds until December. That’s our earliest possible call date on the bonds that are in place now,” Carpenter said. “We can begin the process of selling new bonds in September but with the actual recall and refunding in December.”

But if interest rates go up, the potential savings go down. If interest rates go unchanged the amount the district would save would remain the same. A drop in interest rates between now and September would see the district realize even more savings.

“Another option we have is to look at what is called a private offering,” Carpenter said. “In essence, that means going to banks and saying, ‘What do you think of this type of investment?’ The district has the option of refinancing the bonds or placing them in a loan to the bank. What interest rate would the bank take to make that happen? The district probably wouldn’t’ save as much money, but if we were to do it now we would eliminate the chance of interest rates going up on us. It would eliminate interest rate risk between now and September.”

The board and Carpenter discussed the options during a workshop last October and the treasurer began meeting with a bond firm before then. The firm began seeking offers from banks last week, according to Carpenter.

“We’re starting to put the pieces together,” Carpenter said. “We’re not in a position where we have to do something. But it would be nice to take advantage of lower interest rates; lower even than when we refinanced back in 2007.”

The school board, during its most recent regular meeting, approved a resolution authorizing a refinancing.


Genoa refinanced in 2015
Refinancing a portion of its bond debt last year saved the Genoa Area Local School District approximately $221,990, according to the administration.

The debt was incurred to finance the district’s share of construction costs for the John C. Roberts Middle School building.

Voters in 1999 approved a bond levy to build the new school. The district also received a credit of $6.2 million from the Ohio School Facilities Commission for the project.

The school opened in 2001.

Bill Nye, district treasurer, said the new interest rate is 2.67 percent, compared to 4.13 percent the district had been paying on a balance of $2.45 million.

The refinancing package includes a 13-year maturity, he said.

The district originally issued $3.96 million in bonds in 1999 for the project. The original issue was for 28 years.

 

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