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Board approves $12 million bond defeasance to reduce interest costs and create capacity
Summary
Trustees approved a resolution authorizing the administration to defease approximately $12 million of outstanding principal related to the 2023 series tied to the 2022 bond, projected to generate nearly $1 million in interest savings and create capacity for future bonds.
Magnolia ISD trustees voted to authorize administration to proceed with defeasance and early principal payoff of approximately $12,000,000 of district obligations related to the 2023 series from the 2022 bond election. Doctor Morris, who presented the financial item, said the proposed defeasance would "take advantage of nearly or close to a million dollars in interest savings" and would create capacity for a future bond program. Morris provided a multi-year summary of the district's defeasance and refunding activity dating to 2009 and said that, combining refundings and defeasances since 2009, the district has saved "a little over $34,000,000 in interest" and reduced principal outstanding by approximately $37,000,000. The board adopted a resolution "providing for the defeasance and redemption of certain currently outstanding district obligations" by motion (David moved; Jordan seconded) and the motion passed. Morris said final numbers will be provided after execution in the market; the $12 million figure was presented as the administration's recommendation for the current fiscal year.
