Hermosa Beach City School District adopts bond-refunding resolution, estimates $1.3 million in taxpayer savings

The Hermosa Beach City School District board on Feb. 4 adopted a resolution authorizing the issuance of general obligation refunding bonds, after hearing a presentation from the district's financial adviser, John Isom of Isom Advisors.

Isom told the board the bonds issued in 2016 have reached a 10-year call date that allows refunding. "Financially efficiency, we're at 7%," he said, calling that level "more than double the minimum standard" typically used by the Government Finance Officers Association. On a gross basis, Isom said, "we're looking at about $1,300,000 in taxpayer savings." The presentation explained options for structuring the refunding, including level debt service, deferred savings and short-term upfront savings, and outlined a market timetable that would close the financing in May with an Aug. 1 redemption date for the refunded bonds.

The resolution adopted by the board establishes the legal parameters needed to prepare the bonds for sale, including creating a debt service fund, preparing a continuing disclosure report and producing a preliminary official statement, Isom said. He described the steps that follow: meeting rating agencies, preparing offering documents, marketing through an underwriter and a two-day pricing process before closing.

Board members asked technical and public-relations questions during the discussion. One member asked, "Who makes money off of this?" Isom explained that investors who hold the old bonds receive their redemption payments but that the net effect for local property taxpayers should be lower future debt service payments. Board members said public communication of the savings would be appropriate.

The motion to adopt the refunding resolution was moved by Carol and seconded by Jen; the item passed by voice vote with no recorded opposition.

What happens next: staff and the district's financing team will prepare the legal documents and disclosures needed to take the refunding to market if conditions remain favorable. Isom cautioned that refunding opportunities depend on market rates and call-date timing and may reappear only after another multi-year interval.

Provenance: The district's refunding opportunity and bond-structure presentation began when the board moved to item 10.2 (district refunding opportunity) and concluded with adoption of the accompanying resolution; the transcript records the presentation by John Isom and the board vote to adopt the resolution.