Steamboat School Board approves bond refinance; bids expected within the month
February 27, 2014
Steamboat Springs — On Wednesday morning, the Steamboat Springs School Board during a special meeting approved the motion to move forward and refinance $12.7 million worth of general obligation bonds from 2004 and 2007.
The only caveat the five-person board asked for before moving forward is that savings from the existing bonds be at least 3 percent, which was recommended by Dan O'Connell, a district financial adviser.
O'Connell sent Steamboat Springs School District Superintendent Brad Meeks and district Finance Director Dale Mellor a memo Feb. 21 spelling out potential savings if the district were to refinance the two bonds.
O'Connell said that Government Finance Officer's Association recommends refinancing when savings are at or above 3 percent, like the board asked. The memo spelled out estimated gross savings between the two bonds would be at least 4.22 percent if the district were to refinance soon, while the market allows for such a move.
"Dan is indicating what the market rate is right now for the interest, and that's the savings it's showing," Meeks said Thursday evening.
O'Connell — the director of RBC Captial Markets — said RBC can issue refunding bonds with an average interest rate of 1.83 percent. The 2004 bond's average interest rate is 4.4 percent, and the 2007 bond's rate is 5 percent, and with the refinance would come down 257 basic points and 317 basic points, respectively.
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Meeks also wanted to clarify that once a bid is accepted — which should be within the month — it will be a fixed rate, not variable. Otherwise, "it wouldn't make sense," he added.
O'Connell estimated in the memo that gross savings for tax payers would be about $554,631.
The 2004 bonds were refunding bonds from seven years prior and were used to remodel Steamboat Springs High School. The 2007 bonds were used to replace Soda Creek Elementary School and update Strawberry Park Elementary School.
Meeks said once the final numbers are in place, he and Mellor plan to report them to the board and make them public.