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Finance advisor proposes refinancing 2018 bonds to save roughly $475,000; board to consider in November
Summary
PFM recommended a potential refinancing of the district's 2018 bonds during the finance committee update, estimating about $475,000 in net savings if the board approves parameters in November and the district prices the bonds in early December.
Hatboro-Horsham's finance committee heard a presentation Oct. 13 from financial advisor PFM on a potential refinancing of roughly $10.15 million of the district's outstanding 2018 bonds that, if pursued, would keep the same final maturity and seek roughly $475,000 in net savings.
Garrett Moore of PFM told the committee the district would not extend maturities but would substitute lower interest rates for higher existing rates on the 2018 bonds. "We're simply trading a higher interest rate for a lower interest rate," Moore said during his presentation.
Moore outlined key facts: about $10,150,000 of principal remains on the 2018 issue and those bonds have a call date of March 15, 2026; current market moves over recent months have reduced tax-exempt rates sufficiently to create a refinancing opportunity; and structuring the savings will require refinancing a small portion of 2020 bonds as well to make the timing and cash-flow match the district's budget targets.
PFM presented modeled annual savings targeted to help the district's 2026 and 2027 budgets and said the $475,000 figure is net of any PlanCon state reimbursement and net of financing fees and expenses. Moore described a tentative timeline: if the board authorizes the move, bond counsel and staff would return with a parameters resolution at the Nov. 24 legislative action meeting, pricing would occur in early December to lock interest rates, and settlement would occur in the new year.
Bill Stone, director of business affairs, reiterated that the administration would present a formal recommendation to the full board in November. The discussion included clarification that certain older bond series are already at sufficiently low interest rates that refinancing them would not produce savings, and that the district would preserve bank-qualified status by timing the transaction to settle in the new calendar year.
No formal financing authorization was taken on Oct. 13; PFM and staff will return with the parameters resolution if the board elects to proceed at the November meeting.
