Steamboat Springs A recent refinancing of some of the bonds issued to build Soda Creek Elementary School and expand Strawberry Park Elementary School is expected to save Steamboat Springs School District taxpayers about $864,000 throughout the next decade.
“We kind of scored a jackpot here,” Finance Director Dale Mellor told the Steamboat Springs School Board last week.
The refinancing will save taxpayers an estimated $80,000 annually through 2023.
Along with a recent audit that revealed the district is in good financial health, the savings are a welcome piece of financial news for a school system expected to face another tough budget season.
Dan O'Connell, director for RBC Capital Markets and the underwriter for the bonds, told the School Board in January it had an opportunity to secure significantly lower interest rates for $8.1 million worth of bonds the district issued in 2007.
The board approved the move, and the bonds were put out to the market last month.
Mellor said the district's high credit rating of AA2 was enticing to bond investors from across the country who lined up to buy the debt.
As a result of the sale, the interest rate on the general obligation bonds was lowered from 5 percent to 1.92 percent.
Mellor said the refinancing will amount to about $864,000 in gross savings for taxpayers and will not extend the life of the original bond issue.
“When you spread that out between all the taxpayers on an annual basis, it's not very much,” Mellor acknowledged. “But it still adds up. I think it's kind of exciting we can point to this with the taxpayers and say we saved this money.”
District voters in 2006 passed a referendum that asked for $29.7 million in bonds to rebuild Soda Creek Elementary and to expand Strawberry Park Elementary. The district issued $10 million of those bonds in 2006 to take advantage of a lower 4 percent interest rate and save an estimated $150,000.
The remaining $19.6 million in bonds, which were the subject of the recent refinancing, were issued the next year at an interest rate of 5 percent.
The district estimated the bond issue would cost the owner of a $450,000 home less than $100 per year in property taxes. Mellor said Monday there is no estimate of what the savings the district just realized on the bonds will mean for individual taxpayers.
“It's not savings the district is going to be able to use in other places. The savings go directly to the taxpayers,” Mellor said. “That's the exciting thing about it.”
To reach Scott Franz, call 970-871-4210 or email scottfranz@SteamboatToday.com