With interest rates inching up, the Bernards Township school district didn't quite save the $2.7 million expected for a refinancing program for the remainder of outstanding bonds from the last school construction referendum — but the figure was close.
School Board member William Koch reported that the arrangement made for the refinancing of the bonds will save the district an average of almost $168,000 per year, for a total of $2.5 million in lower interest payments. The district had expected to save about $185,000 per year.
Koch said last month this latest round of refinancing was for more than $24 million worth of bonds due to be paid off in 2030. However, he added on Tuesday that the bulk of the bonds will be retired between 2023 and 2027.
The net interest cost of bonds sold was a slight fraction under 2.8 percent, Koch said on Tuesday. During the refinancing process, the district learned it has a double A bond rating, Koch said at last week's school board meeting.
That savings would be on top of about another $797,000 that the school district had saved by refinancing another $8.4 million during 2012, Rod McLaughlin, business administrator for the school distict, said in January. The bonds being refinanced cover the school district's share of a $51 million schools construction project in 2005, according to figures from school officials.
This latest round, with $24,385,000 worth of bonds, covers the remainder of the school district's outstanding debt from that project, Lisa Gorab, bond counsel for the Bernards Township school district, told the Board of Education in January.
Gorab said that the bond market had been even more favorable in November, the last time the refinancing was discussed with school officials.
The Board of Education had approved the refinancing of the entire amount of outstanding bonds in 2012. But school officials were not able to refinance all of the bonds in 2012.
"Since the first round was under $10 million it qualified for certain tax advantages to its purchasers and the seller [and] the Board of Education got a lower interest rate in return," McLaughlin explained. He said to receive that benefit, the board had to agree not to refund more than $10 million in the year that bonds were sold or issued under that provision.