Oxford school district taxpayers will save more than $8.4 million in debt interest as the school board July 22 voted 6-0 to approve the sale of refunding bonds.
Superintendent Tim Throne called it ‘great,? noting that he sees ‘no downside? to it.
‘I’m thrilled that one of the first actions we could do this fiscal year was to close out the resale of bonds, saving Oxford taxpayers over $8.4 million,? he added. ‘It took about 2? months from starting the process to selling them on the market and having the board complete the sale. It’s a big process, but hopefully the taxpayers (will) see it (was) worth all the work.?
According to a press release, the sale results in a projected cost avoidance of $2,969,364 on refunded State Loan, $3,151,574 actual savings on refunded bonds and $2,356,720 projected savings on State loans due to bond refunding. Oxford sold two series of bonds. Series A in the amount of $26,580,000 are being issued for the purpose of refunding a portion of the school district’s outstanding 2004 Refunding Bonds, 2005 Refunding Bonds and paying a portion of the costs of issuing the Bonds.
‘The 2015 Refunding Bonds, Series A reduce Oxford’s interest expense approximately $3,151,574 for the taxpayers and will occur through lower debt payments over the next 10 years,? stated the press release.
‘The Series B in the amount of $43,850,000 are being issued for the purpose of refunding certain outstanding indebtedness of the school district to the State of Michigan under the State of Michigan School Bond Qualification and Loan Program and to pay a portion of the costs of issuing the bonds. They are expected to reduce the repayments to the State of Michigan by a total estimated amount of $5,326,084. The estimated reduction in repayments is based upon the current School Bond Loan Fund interest rate of 3.5 percent.?
In preparing to sell the 2015 Refunding Bonds, Series A and 2015 Refunding Bonds, Series B, Oxford’s, working with its financial advisor, Stauder, Barch& Associates, Inc., requested that Moody’s Investors Service evaluate the school district’s credit quality. Moody’s assigned the school district the underlying rating of ‘Aa3.? The rating agency cited the school district’s large and diverse tax base, above-average socioeconomic indicators, and growing enrollment trend in its rationale for rating Oxford at this level.
Oxford’s bonds were purchased by Goldman Asset Management, Northern, Gurtin, Sterling Capital Management, Sageworth, JP Morgan, Western Asset Management, Allstate, Eaton Vance, and AAA Michigan Auto Club Insurance.
Oxford’s financing was handled by the Michigan investment banking office of the brokerage firm Stifel; the financial advising firm Stauder, Barch& Associates, Inc.; and the law firm serving as bond counsel, Thrun Law Firm, P.C.
Oxford’s 2015 Refunding Bonds, Series A were sold at a true interest rate of 2.17 percent with a final maturity of 2025 (a repayment term of approximately 10 years) and the 2015 Refunding Bonds, Series B were sold at a net federally taxable interest rate of 2.35 percent with a final maturity of 2021 (a repayment term of approximately six years).
Brenda Voutyras, Managing Director with Stifel stated, ‘Oxford Community Schools? bonds were well received by the bond market. We saw a good demand and were able to take advantage of current low-interest rates that resulted in a savings level that met the goals of the district.?