The Hollister School District refinanced $6 million in bonds
sold in the late 1990s to take advantage of lower interests rates
and save local taxpayers nearly $500,000 in the process.
”
It’s important to make our tax dollars go as far as they
can,
”
Board of Trustees member Dee Brown said.
”
Refinancing saves money for everyone.
”
Hollister – The Hollister School District refinanced $6 million in bonds sold in the late 1990s to take advantage of lower interests rates and save local taxpayers nearly $500,000 in the process.
“It’s important to make our tax dollars go as far as they can,” Board of Trustees member Dee Brown said. “Refinancing saves money for everyone.”
In the spring of 1997, the Hollister School District Board of Trustees asked voters to approve the sale of $6 million in bonds to fund several construction projects within the district. The bonds were used primarily to build gymnasiums for Sunnyslope Elementary School, R.O. Hardin Elementary School and Rancho San Justo Middle School. Additional funds were used to finish construction on Gabilan Hills Elementary School and begin construction on Ladd Lane Elementary School.
The two outstanding bonds, funded through an additional property tax imposed upon local residents, previously carried an average interest rate of 5.2 percent with a 25 year maturity date. After voters approved the bond measure, the Hollister School District sold two bonds: a $3.3 million bond in 1997 and a $2.7 million bond in 1999.
Hollister School District Superintendent Ron Crates suggested the Board consider refinancing the bonds in December of 2005 after looking at the original interest rates of the bonds.
The Board voted last month to refinance the bonds at a 3.9 percent interest rate – more than 1 percent lower than the rate they had been issued at – after learning that the move would save taxpayers $491,358, said Jack Bachofer, the district’s director of business services.
“In addition to getting a better interest rate, we actually knocked two years off the maturity date,” Bachofer said Wednesday.
The earlier maturity date saves taxpayers two year’s worth of interest and lowers their property tax rate. The average taxpayer pays $10.10 annually to support the bonds, but Bachofer said he did not know how much taxpayers stand to save annually as a result of the refinancing.
Saving the taxpayers money could make it easier for the district to request future bonds, said County Superintendent of Schools Tim Foley.
“I would certainly hope that it would lend credibility to the district’s money management,” he said. “It shows that they are staying on top of their commitments.”
The refinanced bond issue, insured by Financial Security Assurance Inc., received a “AAA” rating from Standard and Poor’s rating agency, said Tony Hsieh, assistant vice-president of the district’s financing firm, Piper Jeffray and Company. That means the bonds are a secure investment, he said.
Brett Rowland covers public safety for the Free Lance. He can be reached at 831-637-5566 ext. 330 or [email protected].
