By Stephanie Vaccaro, Staff Writer
The Montgomery Township Board of Education approved a final reading of a resolution regarding the refunding of outstanding callable school bonds up to $18.8 million at its meeting on Tuesday.
The 2001 bonds are actually a refunding of bonds that were issued in1995 for the construction of the middle school, currently the Lower Middle School, and additions to Orchard Hill and what is now the Upper Middle School, said Thomas Venanzi, school business administrator and board secretary.
”The decision to refund is made when the market is such that the district can achieve at least a 3 percent savings on any outstanding bonds,” said Mr. Venanzi. “This particular issue is the only outstanding issue that meets the test. We review our outstanding debt through our financial advisor on an ongoing basis.”
”The investors will get their principal payment back plus any accrued interest and in some cases they will obtain a premium for the call,” said Mr. Venanzi. “The premium would be no higher than 1 percent of the principal amount. Investors know when they invest in bonds whether or not a call feature exists, so this is pretty normal for investors to see. Investors then make a decision about making new investments once their principal is paid back to them.”
”We still need to monitor the market to insure that the district can achieve at least 3 percent savings between now and when we proceed with the refunding, which is scheduled to occur in early April,” said Mr. Venanzi. “If something should happen to the market that we are notable to achieve this level of savings, then we won’t go forward. Assuming that we do proceed, we are expected to save approximately$100,000 per year in debt service payments over the next 15 years due to this refunding.”

