The October 12, 2011 School Board Meeting included presentation of the Results of Refunding General Obligation Bonds.
On September 14, 2011, the board approved for staff to move forward with the
refunding of existing bonds to secure lower interest rate and debt service. The
refunding refinances BUSD’s Series 2003 General Obligation Bonds and 2004
General Obligation Refunding Bonds with a new refunding general obligation
bond of about $60 million. It was expected that the District would realize at
minimum a present value savings of 4% or $2.5 plus million, for a future value
(actual dollar) savings of $2.7 plus million off of the property tax funding
requirement. The savings was structured to occur proportionately more in
earlier years to help with future new issues from the District’s 2010 Bond
Authorization and overall tax rate, compared to the remaining debt service on
the Series 2003 General Obligation Bonds and 2004 General Obligation
Refunding Bonds. This saving would be realized after all costs of issuing the
The competitive sale took place on September 29, 2011 and will close on or
about November 1, 2011 (also when the outstanding Series 2003 General
Obligation Bonds and 2004 General Obligation Refunding Bonds will be
redeemed). The results of the sale are as follows: $55,625,000 in 2011 General
Obligation Refunding Bonds were sold to Citigroup Capital Markets Inc. (best of
eight bids) as underwriter at a true interest cost rate of 3.04% (final maturity of
August 1, 2027, so a 16 year issue), realizing a present value savings of 7.38%
or, in dollars, $4,301,630, and aggregate future, actual dollar savings of
$5,165,418 taken off of the property tax funding requirement over the life of
the issue (these numbers are net, after all financing costs). For BUSD’s bond
program, lower aggregate future debt service, particularly over the next few
years, will assist in fitting future bonds within the tax rate promises made to
voters during the 2010 Bond Authorization election.
V. Resources: Generate and equitably allocate resources for programs and
services that enable every student to succeed.
Total savings to the taxpayers of BUSD is $5 million over the life of the issue,
after all costs of issuing the bonds.