Dec 15 2017

School Bond Refinancing Will Save Piedmont Taxpayers Over $26.1 Million

PRESS RELEASE

December 15, 2017

Piedmont Unified School District Saves Taxpayers More Than $26.1 Million with Bond Refinancing

On Tuesday, December 12th, the Piedmont Unified School District issued $27 million of 2017B General Obligation Refunding Bonds. Through the refinancing, property owners within the District will save more than $26.1 million over the remaining life of the bonds, equal to approximately $10.85 million in present value savings or 68.14% of bonds refunded. The substantial amount of savings generated from this refunding are primarily attributable to the Board’s decision to replace outstanding Capital Appreciation Bonds (CABs) with more cost effective Current Interest Bonds (CIBs). Refunding bonds, which are similar in purpose to refinancing a home mortgage, pay off existing debt with funds borrowed at a lower interest cost.

The refunding bonds were sold through a competitive bidding process with the winning bidder, Morgan Stanley & Co. LLC, submitting the lowest bid at a true-interest-cost of 3.17%. Morgan Stanley was the lowest out of 7 bidders, reflecting strong demand for the District’s highly rated bonds. Moody’s Investors Service and Standard & Poor’s assigned ratings to the District’s bonds at “Aa2” and “AA+,” respectively. The ratings place the District among roughly the top 15 percent of California school districts, reflecting the District’s strong financial management, steadily growing tax base and above-average economic profile.

“The Board of Education was thoughtful and deliberate during the planning stages for this refinancing and understood timing was critical as many municipal issuers fear they will lose the ability to advance refund bonds on a tax-exempt basis,” said Blake Boehm of KNN Public Finance, the District’s Municipal Advisor. The U.S Senate and House of Representatives are currently working through tax reform legislation that could eliminate municipal issuers’ ability to advance refund bonds with the pricing benefit of tax-exemption.

“The District appreciates the community’s ongoing support to our education programs and student facilities and we are pleased to have an opportunity to show our gratitude by significantly reducing the overall debt burden for homeowners.” The results of this successful refinancing reflect the Board of Education’s commitment to effectively manage its bond program and demonstrate strong fiscal stewardship of public funds. In total, the District has refinanced its outstanding bonds on six separate occasions going back to 2001, saving taxpayers more than $36 million dollars.

Randall Booker, Superintendent of the Piedmont Unified School District

www.piedmont.k12.ca.us

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