Northwest District Looks to Save Through Bond Reissue

Northwest School District opted to venture into the suddenly active bond market. The Northwest District Board of Education voted unanimously Thursday to reissue $4.35 million in bonds to take advantage of historically low interest rates.

The bonds will be reissued if the market falls within parameters set by the district.

“We hope to save a minimum of $108,000, and that could be as high as $170,000,” Northwest District Superintendent Paul Ziegler said.

Costs are expected to be $51,575, but the savings already take the costs into account, the superintendent said.

“With the stock market being as crazy as it’s been, it’s a great thing for us because it’s stimulated interest in the bond market,” Ziegler said.

The district’s bond consultant, Piper Jaffray Cos., approached the district after seeing the bond market’s interest rates plummet as stocks dropped.

There is some risk for the district.

“It’s a volatile market,” Ziegler said. “Everything could go through the roof or stocks might take off again. One thing we are on the hook for is the rating call.”

That would cost the district about $9,000. However, if the market isn’t favorable after the rating call is made, that’s all the district would lose. Compared to the potential savings, it’s well worth the risk and one that Piper Jaffray recommends, Ziegler said.

Ziegler said the savings will not help the district from an operational standpoint, because the funds are entirely in the debt service fund, which can be used only to pay general obligation bond principal, interest and fees.

“But we’re saving the community’s money,” Ziegler said. “We’re being good stewards of taxpayer’s money.”

The move also opens up capacity for future no-tax increase bond issues.

The bonds were originally issued in 2004 to raise $5 million for improvements to Northwest High School.

During Thursday’s board meeting, Northwest Way contributed $2,800 to the American Cancer Society. Northwest Way is the district’s charitable arm. About 400 employees participate in the program, which benefits a new charity every month.