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Schools

Lindbergh Hopes Refinancing Bonds Saves Taxpayers $500K

Board sets wheels in motion to take advantage of low interest rates.

The Lindbergh School Board is hoping to save taxpayers more than $500,000 by refinancing bonds issued in 2003.

The board unanimously approved having the district’s administration pursue refinancing the bonds during its meeting on Tuesday night at the Early Childhood Education Center.

Lindbergh Chief Financial Officer Pat Lanane said the move was an opportunity to save taxpayers money through lower property tax rates.

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“That’s a half million dollars the district will never receive. That’s a half million dollars less in property taxes taxpayers would have to pay in the future,” Lanane said. “We think it is our duty to take advantage of these opportunities when they exist.”

Voters approved $14 million in 2003 to finance construction projects throughout schools in the district. About $11.5 million of that debt remains to be paid, but refinancing now would save taxpayers about 6 percent in interest costs, Lanane said.

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In order to refinance, the district would need to use a financing tool known as “advance refunding.”

Advance refunding requires the board to authorize the sale of additional bonds in January. The proceeds from that sale would be used to purchase federal government securities.

The principal and interest from the securities would pay the principal and interest on the 2003 bonds until those bonds could be retired in March 2013—eliminating those bonds and leaving taxpayers to repay the newly issued bonds.

Should the lower interest bonds be issued today, taxpayers could see savings of $520,000. But Lanane cautioned volatility in the market could fluctuate those savings.

Lanane said he would advise the district to pursue refinancing even if anticipated savings were about $250,000. A school district can only refinance bonds once through the life of the bonds.

Board member Vicki Englund questioned the expected $14,000 cost of pursuing the bond refinancing in lieu of fluctuating interest rates.

“The savings are so great it is well worth the risk to get ready, to do the work, for the possible sale of the bonds,” Lanane responded.

In other news, Lindbergh Superintendent Jim Simpson also recognized the Lindbergh Board of Education for being selected as a finalist for the 2011 Outstanding Board of Education Award in Student Performance by the Missouri School Boards’ Association.

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