Jessica Cejnar / Friday, Aug. 23, 2019 @ 12:54 p.m. / Education
School Board Authorizes Bond Refinancing, Will Consider Selling Final $5 Million Series Next Month
Property owners are expected to save an estimated $1.6 million in taxes after the Del Norte County Unified School District Board of Trustees voted Thursday to refinance three bond series.
Education finance advisor Jon Isom urged trustees to take advantage of 3.09 percent interest rates in the taxable and tax-exempt bond markets. The interest rates are conservative projections, Isom said, but he encouraged the school board to approve the refinancing before it considered selling the final $4.9 million bond series.
Trustees will consider selling the remaining bond series, Series E, at its Sept. 12 meeting.
“Maybe if we waited six months, maybe we’d get more of a savings,” Isom said, “but I’m betting rates will go up rather than further down.”
Del Norte Unified School District’s bond program goes back to November 2008 when voters approved $25 million to upgrade, modernize and renovate existing schools, Isom said. Since then the district has sold $20 million in $5 million increments with the most recent sale occurring in 2016. About $5 million remains in bond dollars, Isom said.
The school district saved taxpayers roughly $500,000 in 2013 by choosing to refinance bond Series A, which was sold in 2009, according to Isom. Trustees sold the district’s second and third bond series in October 2013 and February 2014, he said.
“The opportunity you have before you is two different resolutions,” Isom said. “One is to re-fund series B and C on a taxable basis. The other is to refund the 2013 taxable bonds. The hope is that we’re able to capitalize on these historically low interest rates and lock in a sale and lock in a savings to taxpayers.”
Since the bond went into effect, property owners have paid an estimated $55 per $100,000 of assessed value, according to Isom. Now, following the board’s decision to refinance the first three bond series, property tax assessments will be lowered to $53 per parcel.
Tax rates will stay at $53 even if trustees sell the remaining bond series, Isom said.
“Now’s a good time to borrow,” he said. “We’re seeing the second lowest interest rates in history. It was lower one other time and that was during Brexit, summer 2016 when everybody thought the sky was falling.”
According to Isom, when geopolitical issues prompt a lack of confidence in the marketplace, people want to put their money in a safe place such as bonds.
“What we’ve seen a lot lately between tariffs and tweets and other things, there’s just a general discomfort and that means tremendous demands for bonds,” he said.
At the school board’s Aug. 8 meeting, Assistant Superintendent Jeff Napier told trustees that a modernization project at Joe Hamilton Elementary School is ready to go out to bid, but the district doesn’t have the money currently.
Superintendent Jeff Harris told trustees on Aug. 8 that selling the remaining $4.9 million in bonds would make money available for school projects and potentially allow the district to pursue state financial hardship dollars in the future.