Bond refinancing could save $800K
LOWER POTTSGROVE » The Pottsgrove School District could see as much as $800,000 in savings on its annual bond payments if the school board moves forward with a refinancing plan of more than $27 million of its debt.
The plan was presented at the May 11 meeting by Jamie Doyle from Public Finance Management.
She said with “inflation being the big topic right now,” investors are seeking the safety of taxfree municipal bonds like those issued by the school district.
Doyle suggested re-financing three sets of bonds in two steps to achieve the savings.
A 2014 borrowing for $13.4 million carries a 2.75 percent interest rate.
A 2015 bond for $8 million carries a 2.1 percent interest rate and a 2016 borrowing of $6 million carries an interest rate of 2.05 percent.
All three bonds mature in 2027 or 2028 and her plan would not extend the life of those bonds, but rather lower the annual payments the district makes until the bonds mature.
So the savings would accumulate over that period.
According to Doyle’s proposal, the 2015 and 2016 bonds totaling $14.2 million would be refinanced in July; and the 2014 bond in November.
If the school board approves the plan, which could happen as soon as the next meeting, the re-financing would be pre-authorized to occur on the most advantageous market day so long as a minimum savings of 2 percent or more of the total bonds’ value can be achieved.
Doyle’s “conservative” estimates put the savings from the second sale as high as 4 percent.