District cuts costs refinancing older bonds

By Eileen Oldfield Staff Writer
   The Hillsborough School District expects to save $25,000 a year for the next 14 years after refinancing approximately $9 million in outstanding bonds.
   The refinancing, which was approved earlier this month by the Board of Education, netted the district an approximately $400,000 savings over the bonds’ 14-year life span, Assistant Superintendent for Business Tom Venanzi said at the board’s Sept. 17 meeting.
   The deal was sealed the week of Sept. 10 with the Bank of America.
   ”I’m pleased to report that last week we were able to generate a deal with the Bank of America through a privately negotiated deal,” said Mr. Venanzi. “The terms of that deal were that we were able to refinance our existing debt of approximately $9 million, on this particular deal, with an interest rate of 3.87 percent.
   ”That was the lowest rate we could generate,” he said.
   By state law, bond refinancing must guarantee a 3 percent net savings, based on present market values.
   The present savings value of the bond is 3.426 percent, a savings of approximately $25,000 to $30,000 a year over the bonds’ life.
   The district introduced the refinancing in July, and was subject to public review at the Aug. 20 Board of Education meeting.
   The refinancing applies to approximately $9 million in outstanding bonds originally issued for the expansion work at Hillsborough High School.
   That bond was issued for $12.9 million in September 2001, and was a refinancing of an earlier bond issued for the high school project.
   The district refinanced several bond issues at that time, projecting savings totaling $2.2 million of the 20-year life of the bonds.
   The board underwent competitive bond negotiations with private firms, rather than the normally public process.
   ”This is not the typical way you go through refinancing of old bonds,” said Mr. Venanzi. “Typically, it is a long, drawn-out process that involves formal advertising, formal bidding, then once you get your bidder, you go through the local finance board, which is a state agency. It can take several months.”