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Red Oak ISD board authorizes bond refinancing, seeks roughly $2.3 million in interest savings
Summary
The Red Oak ISD board authorized staff to pursue refinancing of callable 2016 and 2017 bonds and to issue unlimited tax bonds as needed; financial advisers said the targeted refunding could lower an average 4.45% interest rate to roughly 2.5–3.6% and yield nearly $2.3 million in savings if market conditions cooperate. Vote: 7–0.
The Red Oak Independent School District board voted unanimously to authorize issuance of additional unlimited tax bonds and to proceed with a targeted refunding of portions of the district's 2016 and 2017 bond series.
Brian Grubbs, the district's financial adviser with Samco (S19), told trustees the plan targets about $8.5 million of 2016 bonds and roughly $16.1 million of the 2017 series, representing an outstanding average interest rate of about 4.45% that the district hopes to replace with rates in the 2.5%–3.6% range. "In doing so at the bottom, we hope to generate, almost 2,300,000 from this refinancing," Grubbs said. CFO Dr. Bill Johnston (S12) said authorization does not obligate the district to complete the refunding if market savings do not reach the district's threshold.
Trustees asked staff about timing and assumed savings; Grubbs said the bonds are not callable until August and the district cannot lock rates until mid-April, so any refinancing depends on market movement. After discussion the board approved an order authorizing staff to move forward with the processes required to refinance and to proceed with bond-issuance steps as appropriate. The motion passed 7–0.
