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School board authorizes superintendent to pursue forward rate lock for tax anticipation note
Summary
To hedge market volatility ahead of the 2025 tax anticipation note, the board authorized the superintendent to enter a forward fixed-rate lock with Wells Fargo if deemed in the district’s best interest; the TAN is not to exceed $15 million.
The School Board authorized the superintendent to enter into a forward fixed-rate lock agreement ahead of the district's 2025 tax anticipation note (TAN) to protect against market rate movements. The board approved the measure by voice vote.
District staff explained that Indian River County School District relies heavily on locally assessed property tax revenues, which do not arrive until October and November. To cover operational expenses from July through December the district borrows with a tax anticipation note. Bruce Green told the board the TAN for 2025 is "not to exceed $15,000,000," and the most responsive bidder on an invitation to negotiate was Wells Fargo.
Green said Wells Fargo’s current offered forward fixed rate was 3.99 percent and contrasted that with the district’s local investment interest rate in Florida Prime at 4.521 percent. Because the district has no board meeting between the present date and the expected TAN signature on Sept. 9, the rate-lock authority would permit the superintendent to lock a rate if market movements made doing so prudent. "We certainly wouldn't use this mechanism unless it was absolutely in the best interest of the district," Green said.
Ms. Rosario pulled the item from consent for discussion and said she did not consider the item "routine," asking for the board to take action. Board member Mr. Dyer said he hoped the district would not need to exercise the lock if rates fell, but that authorizing the superintendent provided a prudent contingency.
A motion to approve the superintendent’s authority to enter a forward rate-lock agreement for the 2025 tax anticipation note was made and carried by voice vote; board members recorded an affirmative vote and the measure passed unanimously on the record.
The action delegates limited authority to the superintendent to execute a forward-rate lock agreement with Wells Fargo if doing so becomes favorable; the district did not record a final locked rate at the meeting.
