February 12, 2014 - Lindbergh Schools taxpayers will save more than $3.5 million with this week's refunding of general obligation bonds originally issued in 2007.
The savings to taxpayers totals more than $1.8 million over the original estimate of $1.67 million, the district's independent financial adviser, Joy Howard of WM Financial Strategies, told the Board of Education Tuesday night.
Earlier that day, the district sold roughly $32.65 million in bonds to refund bonds issued in 2007 as part of Lindbergh's Proposition R 2006 that funded building repairs and safety upgrades.
The Board of Education voted unanimously to adopt a resolution approving the sale of the bonds to Robert W. Baird & Co. Inc. of Milwaukee, Wis. Robert W. Baird & Co.'s true interest cost — a combined measure of the interest and underwriting fees — of 2.741089 percent was the lowest of 14 bids submitted. The savings to district taxpayers totals $3,503,832.
Chief Financial Officer Charles Triplett told the board, "… We've done this several times before when the opportunity to get a lower interest rate presents itself, and we did that today. We used a competitive bid process to make this refunding available. That has also been very successful for us, and had great success this morning, as well …"
The 14 bids the district received was a record for Lindbergh, Howard noted.
"… The most bids I've ever had for you in the past was 13, so we beat it by one this time," she said. "Typically, the more bids you receive, the better the interest cost, and it definitely proved to be true in this case …"
The true interest cost ranged from the winning bid of 2.741089 percent to the highest bid of 3.286533 percent.
"… If you look at the best bid and the next bid, they were very close, and even just with a few basis points difference because it was a very large issue, that difference equated to $134,000," Howard said. "And the difference between the best bid and the worst bid was over $1,900,000.
"Now the worst bid happened to be pretty close to the figures that I was using. I tend to be a little bit conservative, but on top of that, interest rates did improve somewhat since I started working on this for you … I had given you an estimated savings of $1,672,000, and the savings that we have as of today — they're not final. They're actually going to be a little bit higher — worst-case scenario is $3,503,000, which is a difference of $1,830,000, more or less …"
Howard told the board the savings can be attributed to the fact that the district received 14 bids for the refunding.
Of the savings, she said, "So it's huge, and I'm really happy about it because it really improves your pattern of debt service and will definitely help you keep your tax rates down … This is like phenomenal. I'm always happy when I can deliver better savings than I expected, but for me, I would have been happy to say, 'Oh, it's $100,000 better.' This is just kind of shocking …"
This week's bond refunding is the eighth the district has done since 1998, saving taxpayers a total of $8,819,568.
Of those eight refundings, Triplett said, "… We've refunded almost $87 million of principal … We have saved taxpayers more than $8.8 million in interest off of this. That's more than a 10-percent savings from the principal on the bonds that were issued. Again, we're happy to do that anytime we possibly can and get the best value for the taxpayers …"
Superintendent Jim Simpson noted that district taxpayers are the sole beneficiaries of the bond refundings the district has done since 1998.
"I would mention for the audience, I know the board knows this … this is total taxpayer savings. Some people think, well, the district saved $8 million, what are they going to spend it on? There's no spending it on anything. This is just like your mortgage dropping. It's just taxpayers will not have to shell out the $8 million. The district has not benefited anything other than our desire to help taxpayers."