By David Fleet
Goodrich- The school board of trustees voted 7-0 on Nov. 27 to pursue refinancing some of the school bonds. The district announce earlier this year the successful refinancing of a portion of their outstanding 2011 School Building and Site Bonds, dated May 11, 2011 and their current loan balance with the Michigan School Bond Qualification and Loan Program.
This is the first refinancing of a two deal process to optimize refunding of the district’s outstanding callable debt. The second refinancing is expected to occur in early 2018.
Terese Knag, shared time director of business services for the Genesee Intermediate School District said this will be saving to taxpayers.
“We cannot lower the amount of principal the district has accumlated,” said Knag. “Rather, we are looking for the lower interest rates out there to reduce the interest paid for the bonds. The cost avoidance for the district taxpayers is about $3.2 million over the life of the bonds through 2040. It’s just like refinancing your house, there are lower rates out there.”
On Nov. 1, 2017 district administration priced their 2017 Refunding Bonds successfully.
The net savings from refunding a portion of the 2011 Bonds is $1,038,990 realized over 24 years. That is a present value savings of $713,426 or 10.77 percent of refunded principal; The projected savings (School Bond Loan Fund interest cost avoidance) from refunding the SBLF loan is $678,187 projected to be realized over 11 years. That is a present value savings of $445,344 or 3.95 percent of the loan amount refunded; The refunding also results in projected School Bond Loan Fund interest cost avoidance for the refunding of the bonds of $69,752. The combined gross savings from refunding of the bonds plus the projected SBLF interest cost avoidance totals over $1.7 million over next 24 years.