The Hollister School District is in the process of refinancing
$6 million in bonds sold in the late 1990s
– a move which District officials anticipate will save local
taxpayers upwards of $300,000 in the long run.
Hollister – The Hollister School District is in the process of refinancing $6 million in bonds sold in the late 1990s – a move which District officials anticipate will save local taxpayers upwards of $300,000 in the long run.
“In the 90s, Hollister School District was the fastest growing district in the state,” said Jack Bachofer, HSD Director of Business and Operations. “An increase in population like that means you have to expand, and the bond was originally intended to alleviate overcrowding.”
In spring of 1997, the Hollister School District Board of Trustees called a special election, asking voters to approve the sale of $6 million in bonds to fund several construction projects within the District.
The bonds were issued at a 5.1 percent interest rate with a 25-year maturity date, funded through an additional property tax imposed upon local residents.
After voters approved the bond measure, the District sold two bonds: a $3.3 million bond in 1997 and a $2.7 million bond in 1999.
The money was used to build gymnasiums for Sunnyslope Elementary School, R.O. Hardin Elementary School and Rancho San Justo Middle School. Funds were also used to finish construction on Gabilan Hills Elementary School and begin construction on Ladd Lane Elementary School.
“Interest rates are a lot better now then they were in the 90s,” Bachofer said. “So now it’s just like when you refinance a house, you have an opportunity to save some money.”
Bachofer credits Interim Superintendent Dr. Ron Crates for the initial idea to refinance the bond shortly after he was hired in the fall. The Board of Trustees voted to support a refinancing on Dec. 6, on the condition that taxpayers would save at least $300,000, after the District had paid for necessary insurance and other fees to refinance.
“If current market conditions hold up, we estimate that the interest rate on those bonds could go from 5.1 percent to below 4 percent,” said Tony Hseih, Assistant Vice-president of Piper Jaffray and Company, the institution refinancing the District’s bond.
After the District files the necessary paperwork both with investors and Piper-Jeffrey, the bond is subject to a four or five-day marketing period, after which the District will make a final decision on whether to go ahead with the refinancing.
If all goes well, Bachofer expects the process will be completed by the end of the month.
The refinancing process also takes one year off the maturity date of the bonds, saving taxpayers a year’s worth of interest in addition to a decrease in their property tax.
Currently, the average taxpayer pays $10.10 annually to support the bonds. While neither officials from the District or Piper Jaffray were able to estimate how much the average taxpayer would save after the refinancing, both were confidant that local residents will benefit from the decision.
“It’s hard to say exactly how much, but the rate will probably be lower,” said Hseih. “And that’s good news for everyone.”
Danielle Smith covers education for the Free Lance. Reach her at 637-5566, ext. 336 or [email protected]
