Amherst district saved $1 million on new school

A financial consultant asked Amherst School officials if the community knew the great jobs they do for students.

A financial consultant asked Amherst School officials if the community knew the great jobs they do for students.

Consultant David Conley from Rockmill Financial said he started dealing about three years ago with the Amherst Exempted Village School District.

Renderings were provided by GPD Group for a new school building which should be complete in about two years, he said.

“It’s pretty nice. I get the fine honor of going over the financing summary. Thank you guys for your trust you placed in me and your faith,” Conley said. “You guys are wonderful to work with, just wonderful. After 30 years and 125 school clients across the state of Ohio, I’ve seen a thing or two. You guys are a class act. Your kids are incredible, too.”

Patience mattered on allowing the financial package to come together.

The bond issue passed with 65 percent of the votes and a promise of no increased taxes, he said.

The goal was a bond issue that would last 25 years, but it’s only going to last 21 years, Conley said, because interest rates ended up lower than estimated. But for a while rates soared above what they estimated.

“Because of the patience, the rates came back down. There were so many school districts that jumped out ahead of us and sold their bonds,” Conley said. “We decided to take our time. The rates came down. So it worked out.”

He praised the district leaders’ performance at a rating evaluation at Moody’s in Chicago.

They practiced what they would say many times, and the presentation flowed seamlessly, Conley said.

As a result, the district maintained an Aa-2 rating from Moody’s, he said.

“I can tell you the rating presentation was probably the best I’ve ever sat in,” Conley said. “You guys did an extraordinary job.”

Amherst Schools is in the highest of credit qualities for all school districts in the state, he said.

“What that translates into is a lower interest rate than everybody else,” Conley said. “When we borrow money we get interest rates lower than the other school districts in the state. The rating agency cited the income of the community.”

Another citation was the strength of district finances, careful planning and spending, and length of time of the conservative approach, he said.

“It’s what I wanted to be seen by the community,” Conley said. “You produce a lot out of the tax dollars you’re spending for the students without wasting it.”

The district had the opportunity to break the financing into two pieces to take advantage of a loophole in tax law that says if the district borrowed less than $10 million a year, then the financing gets a special interest rate known as bank qualification, he said.

The two pieces were in December and February, he said.

That allowed them to sell both bond issues as bank qualified, Conley said, 15 days apart.

“That bank qualification saved about $700,000 in interest,” Conley said. “That’s in addition to the interest rate movement that helped us as well.”

The district sold to most large entities except insurance companies and pension funds because the interest rates were so low.

Some local investors purchased bonds also, but he declined naming them.

There are 22 principal payments 21 years long, he said.

The first issue sold for 3.213 percent and the second issue sold for 2.984 percent, he said.

For the ballot the district estimated 3.75 as a budgeted interest rate, he said.

A blended interest rate is 3.15 percent, he said, so about 0.60 percent less than estimated.

Taxpayers are paying 3.8 mills currently, but for the first 13 years it will drop to 3.78 mills, Conley said.

Then the millage will drop to 2.47 mills in year 2032, he said.

At that time the district could place an operating levy on the ballot without raising taxes, or lower taxes, Conley said.

“The nice story is we not only met the millage we promised the community, but we created some breathing room in a tax break on the back end,” Conley said. “The conclusion, the Aa-2 rating and the lower interest rate we ended up $1 million dollars lower in interest expense for the community.”