CALIPATRIA – The recent refinancing of $6.45 million in general obligation bond debt is expected to save Calipatria Unified School District property owners $920,000 in tax payments over the course of the remaining life of the bonds.
The transaction closed Sept. 3 and locked in an interest rate on the refinanced debt that is about half of what it was previously, according to Superintendent Doug Kline.
“That’s a grand slam, right there,” he said.
Steps leading to securing that nearly historic low interest rate reportedly began at a March 3 board meeting, when the school district’s trustees directed staff and the district’s financial advisor, CFW Advisory Services, to provide relief to taxpayers.
Kline advised CFW, which provides financial advisory services to local municipal entities such as school and community college districts, cities, and regional utilities, that he was only interested in going forward with refinancing if it would yield savings of no less than $500,000. However, he said the number he really had in mind was closer to $1 million.
He came awfully close to that higher mark. Favorable conditions in the bond market, combined with the school district’s strong credit rating, make its bonds highly desirable to investors. As a result, Calipatria Unified’s bonds were well received in the market, and most maturities were oversubscribed, with the demand for bonds exceeding amounts available to sell, the district said.
All these positive factors enabled the district to lock in an interest rate (true interest cost) of approximately 2.6 percent for the remaining life of the bonds, which represents a near historic low for this type of transaction, the district said.
“We hit the market at the right time,” Kline said.
There was no increase in the term of repayment, and only those bonds that produced savings were refinanced. All the savings are passed on to the taxpayers in the form of lower property tax bills, and the district said it will not retain any portion of the savings.
The school district’s board approved the refinancing plan unanimously, and the county will be provided a lower payment schedule for the refinanced bonds.
The district said this positive development comes at a time when the community is coping with the impacts of COVID-19 and as the residents of Niland, in the northern part of the district, rebuild from the fire that devastated the community earlier this year.
“The board’s action reflects our continued commitment to looking out for our taxpayer’s in- terests,” board President Raul Navarro said. “We are pleased that this action will benefit our residents, especially during this dificult time.”
Kline agreed. “We greatly value the support our school district receives from our community,” he said, “and we are happy that this refinancing saves our local taxpayers almost $1 million.”