Ken Phillips, of RBC Capital Markets: This was like hitting a grand slam
By: Paul Koepp
Residents looking for tax relief will find some, thanks to a financial maneuver that should save the school district more $3 million, according to district officials.
The refinancing of a $40 million 1997 bond used to build the high school could shave "a little bit more than one tax point," or 1 cent per $100 of assessed valuation, off the school tax rate in each of the next four years, said Board of Education President Martin Abschutz at the board’s meeting Monday.
Beginning in 2008, the bond refinancing, which was completed in April, will save the school district over $800,000 per year for four straight years and a total of about $3.4 million over the life of the 30-year bond.
"This will let us save significant money and save taxes to taxpayers in terms of future budgets," said district Business Administrator Anthony Tonzini.
The school tax rate this year is $2.56 per $100 of assessed valuation. Under that rate, the owner of a home assessed at the township average of $194,400 is paying $4,977 in school taxes. If the tax rate drops by one point next year, the owner of an average township home could expect to pay $4,957, a savings of $20 per year.
Superintendent Gary McCartney said the school district’s previous financial advisers had advocated a refinancing of the bond two years ago, but district officials felt it would not be in the district’s best financial interests due to the bond market at that time.
The district’s new financial advisers said Monday that school officials had been wise to wait.
"None of us has a crystal ball, but I think we made some really good decisions. There was no reason to rush into this refunding," said Ken Phillips, of RBC Capital Markets. "Before, the school district would have been giving up too much."
Mr. Phillips said the bond market was favorable for the April refinancing, which he compared to a home mortgage refinancing in which the borrower moves from higher interest rates to lower ones.
"We always like to be lucky and good," he said. "This was like hitting a grand slam."

