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School District Bond Refinancing Could Return Money to Taxpayers

With bond interest rates at an all-time low, the district could refund its bond to obtain savings to Redwood City taxpayers.

The has been exploring refinancing a fully issued $22 million bond that could potentially result in over $4 million in debt service savings.

In March 2002, the voters approved Measure B, giving the District authorization to issue $22 million in General Obligation Bonds. All $22 million was issued and taxpayers have been repaying on the bonds since then.  

Bond refunding is the same as financing a mortgage or loan.

“Any time we can save money to the taxpayers, we should go for it,” said trustee Maria Diaz-Slocum.

Property owners could save $1.70 average tax rate per $100,000 assessed value. For a $500,000 assessed value, taxpayers could save $8.50.

This would result in no loss or gain to the district’s revenues.

“We want to make sure that taxpayers know this is in no way is giving the district more money,” said trustee Alisa MacAvoy, noting the separate parcel tax campaign, in which the district hopes to generate another source of revenue.

The consultant, KNN Public Finance, will work on a contingent basis and will only be compensated upon the successful completion of the financing.

Ruth Alahydoian, Vice President of KNN Public Finance, said that she could return to the next board meeting with further steps to approve this bond refunding. She estimated the portion of the savings that the consultant would take would be $250,000 for various legal and underwriting fees.

Alahydoian added that the district’s A+ credit rating could improve by demonstrating the ability to refund money to taxpayers. AAA credit rating is the highest.

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Buck Shaw March 15, 2012 at 03:10 PM
Correct me if I'm wrong, and I'm sure you will Lou. Haven't we already payed down one third of the loan already? Visa Vi ten years of payments and this is the portion that has the most interest against the loan. Meaning we are now starting to pay down the balance and it will be paid off in just twenty more years. If we refinance we will be on the books for another 30 years and the first portion will be at the full interest rate ( albeit smaller rate ) and still there. If the perpose is to get more cash flow, I can't see any reason to do this. Why not continue are original decision and have NO payments 10 years sooner. That would seem to me to increase cash flow. And sorry, I don't buy the answer about the "Poor Children untill then" as the voters decided for the Bond payment and the lack of cash flow with the acceptance of the bond in 2002. Extending the Districts indebtedness for a total of 40 years. There is no easy way out of debt ! Lets not make it worse!
Jack Hickey March 15, 2012 at 08:07 PM
Buck, I seriously doubt that the District could or would extend the term on the debt. I do question the District's motive for pursuing this at this time. Now that the Parcel Tax Measure is on the ballot, such action, in my mind is a boldfaced effort to influence the outcome of the election.
Maria Santos March 17, 2012 at 05:45 AM
Mr.Hickey, that would be profoundly unconscionable, something RCSD is incapable of doing given their history of extreme ethical treatment of others!
Jack Hickey March 18, 2012 at 06:59 PM
Maria, RCSD has a history of of using taxpayer dollars to influence elections. The many expensive surveys by campaign consultants Godbe, Tramatola and others, are designed to identify voter hot buttons which can be used by campaign committees. And, close scrutinity of the association between PTA's, (which have contributed funds derived from tax deductible contributions to these committees) and School Site Councils (funded by taxpayer dollars) would likely reveal less than "arms length" transactions.

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