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Board briefed on plan for $17 million bond issuance and possible refinancing of 2017 bonds
Summary
School district finance adviser described a two-part plan to issue the remaining $17 million of previously budgeted capital bonds and to refinance callable 2017 series bonds if market conditions produce net savings.
The Scranton School District board heard a presentation about a two-part financing plan on Jan. 27 that would complete a previously authorized bond issuance and allow the district to refinance certain callable 2017 bonds if refinancing yields required net savings.
Mike Vind, the district (presenter), told the board the remaining issuance would be about $17 million to fund capital projects already included in the 2025 budget. He said the district had split issuance across calendar years to qualify for bank qualification and obtain lower rates.
Vind also described refinancing options for the district C and D 2017 bonds, which are callable this year and have roughly $22 million outstanding. He said any refunding would be structured so it would not extend the repayment term; the refunding bonds would mature in 2035, the same as the existing bonds.
Vind described a common threshold used in the industry for refunding: a net present value savings of about 2 percent. He said that would correspond to roughly $500,000 to $600,000 in net savings for the district at that threshold, but the board may set a different threshold during deliberations.
No resolution was adopted at the work session. Vind said staff would return a formal authorizing resolution for board consideration at the next public meeting and would monitor market rates; if rates move favorably and the board directs a target, staff could move to execute the refunding within the parameters approved at that later meeting.
Board members asked about target savings and timing; Vind reiterated the 2 percent net present value guideline as an industry standard and said the district could set a different target if it preferred. He also listed types of capital projects that could be funded with the remaining proceeds, including roof repairs, paving, masonry repairs and chiller upgrades that were identified in the district capital improvement plan.
The presentation did not include a formal vote. The board placed the authorizing resolution on the non-consent agenda for a future meeting.
