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Rate surprise shaves year off borrowing plan PDF Print E-mail
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Written by BILL SCHANEN IV   
Wednesday, 14 June 2017 18:31

PW-S School District sells bonds at ‘amazing’ 2.97% interest rate to help finance school improvements


    Shortly after Port Washington-Saukville School District voters approved a $49.4 million referendum in April 2015, school officials worked quickly to borrow the majority of that money at an interest rate of 3.2%, believing that interest rates would not get any lower.
    They were happy this week to be wrong.
    On Monday, the district paved the way for the second round of referendum borrowing by selling $8.65 million of municipal bonds at 2.97%, an interest rate that will have a significant impact on its referendum debt payment schedule.
    “That’s pretty darn amazing,” Jim Froemming, the district’s director of business services, told the School Board, which approved the sale.
    Brian Brewer, a managing director for Baird who is advising the district, agreed that an interest rate below 3% was remarkable.
    “This is very good news for the district,” he said.
    Erring on the side of caution in 2015, Brewer initially projected an interest rate of 4.75% for the second phase of borrowing. He revised that estimate in May, calling for a rate of 3.6%.
    The rate of 2.97% means the district will pay about $8 million less in interest than initially anticipated over the duration of the total referendum debt and will shorten the repayment schedule by a year — from 25 to 24 years, Froemming said.
    The district received six bids for the bonds with interest rates that ranged from 3.38% to 2.97%, which was offered by Janney Montgomery Scott LLC.
    That there were six competitive bids, Brewer said, is credit to the district’s AA Standard and Poor’s bond rating.
    Timing was also a factor in securing the low interest rate, Froemming noted.
    “According to the economic news today, we could see a rate increase as early as Wednesday of this week,” he said Tuesday. “Who knows, we may have hit the low.”
    Because the term of any single bond issue cannot exceed 20 years, the district is borrowing the $49.4 million approved by voters in three separate bond issues, which allows it to finance the total referendum debt over 24 years to reduce the annual impact on taxpayers.
    In addition to the $33 million borrowed in 2015 and the $8.65 million approved by the board his week, the district plans to sell $7.75 million in bonds early next year.
    Of the $49.4 million being borrowed, $3.8 million paid for an addition to Dunwiddie Elementary School completed in December and $45.6 million is being spent on the ongoing renovation and reconstruction of Port Washington High School.

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