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Geneva D-304 to refund $2.7M in bonds, saving taxpayers $311K

Debt restructure takes advantage of low interest rate

Geneva District 304- Coultrap Educational Services Center
Jeff Krage – For Shaw Media
Geneva District 304- Coultrap Educational Services Center Jeff Krage – For Shaw Media

GENEVA – The Geneva District 304 school board approved a resolution Aug. 12 to issue $2.7 million in general obligation refunding school bonds.

Elizabeth Hennessy, managing director of Raymond James Public Finance, said the district’s Series 2010 refunding bonds are “callable,” which means they can be paid off early without penalty.

Bond refunding can be compared with refinancing a mortgage to a lower rate.

Hennessy said the savings of $311,000 will go directly to property taxpayers because it will be that much less they will have to pay on their tax bills for the district’s debt.

Hennessy recommended selling the bonds in a private placement at a cost of $30,000 instead of a public sale, which would cost $58,450. Private placement means the bonds will be offered to local banks and investors, she said.

Hennessy attributed the opportunity to interest rates coming down because of economic unrest with tariffs. She said investors are driven to municipal bonds.

“The rates have come down a lot,” Hennessy said.

The 2010 bonds have a call date of Jan. 1, 2020, so the district can refund those bonds within 90 days of the call date and take advantage of what Hennessy called, “fabulous market conditions.”

“That is why we are bringing this opportunity to you tonight,” Hennessy said.

The issue would be closed by Oct. 17, she said.

The district is maintaining its annual debt payments on its bonds at $14.8 million and looks to have its debt paid off by 2029, she said. The vote means Board President Mark Grosso and Assistant Superintendent for Business Dean Romano can sign off on them, provided the bid meets the requirements of the resolution.

“This is going to save over $300,000,” board member Michael McCormick said. “And in so doing, we are not stretching it (the debt) out. And we will be debt-free in 10 years.”

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