By Travis Smola
The Schoolcraft school board at its January meeting approved refinancing the district’s 2009 bonds at lower interest rates. The move is expected to save an estimated $400,000. That’s expected to show up in lower tax rates dedicated to repayment.
Refinancing won’t affect the maturity of the loans, which will be paid by 2026. But it lowers interest rates which ranged from 2.5-4.75 percent.
The district was able to borrow at 2.26 percent and a cost of $4,345,000. The buyer is Stifel, Nicolaus & Company Inc, a brokerage and investment banking firm from Okemos. The result is an eight-year, $400,987 savings to taxpayers until 2026 when the repayment term ends. Of that savings, $72,873 will be used to pay the advisors and lawyers involved in the process.
“That savings will go straight to the community in the form of reduced millage rates,” said the district’s attorney, Matt Hiser of Thrun Law. “I think it’s always important for the district to understand and the community to understand that this isn’t a savings going into the school district general fund, this is really an opportunity for the district to give back to the community by taking advantage of this opportunity.”
Because the process is heavily regulated, the money can be returned only as savings and not banked for future projects.
While the process is similar to refinancing a home mortgage, Finance Director Rita Broekema said that unlike a mortgage, there are limited windows for a district to do this kind of refinancing. In the case of the 2009 bonds, this was the district’s last chance to do it.
The whole process has been ongoing since November. The district worked with PFM Financial Advisors to evaluate its credit rating ahead of the sale. PFM then worked with Standard and Poor’s Financial Services to establish a stable rating of “AA-“ for the district due to a stable economy, low overall debt and growing property tax base.
“Schoolcraft Community Schools’ bonds were well received by the bond market with interest from local banks and national investors,” Stifel Managing Director Brodie Killian said in a district press release. “We were able to take advantage of current low interest rates that met the goals of the district and resulted in a nice savings that will be passed on to the district’s taxpayers.”
“The board of education is very intentional about being good stewards of taxpayer dollars,” Board Treasurer Kathy Mastenbrook said in the statement. “We are committed to being transparent and accountable. We take seriously that which has been entrusted to us and are committed to managing our resources wisely.”