The Brentwood Union School District announced that recent actions to refinance three series of its outstanding general obligation bonds will save taxpayers $1.4 million over the next 15 years. The net present value of savings is greater than 7.09 percent.
On December 3, the District entered the bond market to refinance $16.9 million of its existing general obligation bonds. The original bonds, which were sold in 2005 and 2007 to renovate and improve all schools, add new classrooms, and acquire school sites, were refinanced from a 4.12 percent interest rate to 2.08 percent.
“The District is committed to doing everything possible to meet the needs of our students and community, while also being a good steward of taxpayer dollars,” said Superintendent, Dr. Dana Eaton. “This is part of a larger overall facilities funding program and an example of our proactive approach to leveraging opportunities that will benefit taxpayers.”
Similar to refinancing a home mortgage, the prime benefit of bond refinancing is to save borrowing costs by taking advantage of current lower interest rates. The difference is the District is not permitted to extend the period of the borrowing.
The lower borrowing cost is attributed in part to the District’s high bond rating of Aa3 by Moody’s, which reflects the District’s sound financial management, including a healthy fiscal position and recovering property tax base.
The bond refinancing did not generate any new money for the District. It will, however, allow the District’s taxpayers to experience property tax savings in 2016 through 2029.
