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District reviews bond refunding options; staff to return with updated pricing next month
Summary
A Stifel Public Finance representative showed refunding scenarios for callable 2015 bond issues and estimated present‑value savings of about $939,327 (2.755% of refunded par) with gross savings of roughly $1.09 million; board members agreed to review updated numbers next month before action.
Brett Sjogren of Stifel Public Finance presented refinance scenarios aimed at saving interest costs on several callable bond issues. He explained the mechanics behind using market premiums on new higher‑coupon bonds to generate cash that reduces the new issue size and produces debt‑service savings.
Sjogren estimated the transaction would generate roughly $3.94 million in premium that could reduce the principal of a new issue and produce gross savings of about $1,092,292 over the next decade. "The present value benefit of this transaction is $939,326.93," he said, adding that the present‑value savings in his example equal about 2.755% of the refunded amount — above a common 2% industry threshold that often justifies a refunding.
Board members asked about timing and market risk. Sjogren and district staff said the trade‑off is timing the market: if rates fall further, waiting might increase savings; if rates rise, the opportunity would vanish. Staff recommended returning with updated pricing next month before taking action. The board did not vote on the refunding at this meeting.
