Refinancing Bonds Could Save More than $300,000 for Seneca Valley

Thecould save more than $300,000 over the next decade by refinancing several older bonds to take advantage of current interest rates.

School board members plan to vote at their meeting March 12 on refinancing a $1.6 million bond taken out in 2002, a $1.52 million bond taken out in 2003 and a $1.46 million bond taken out in 2004. Together, the bonds total about $4.58 million.

District business manager Lynn Burtner said interest rates for the three separate loans range between 3.4 and 5 percent. If the district refinances and combines the bonds, the new interest rate would fall between 2 and 3 percent, she said.

Selling the bonds on the financial market would not change the repayment terms for the loans, which are scheduled to be paid off in the next 10 years. By refinancing, the district would save about $30,000 per year through the next decade, Burtner said.

The district typically considers refinancing when there’s a chance of saving 2 percent or more on the amount it owes. District bond counsel Robert Aumer, of Janney Montgomery Scott LLC, said refinancing now would triple the minimum savings percentage.

The board also plans to vote on whether to pay for the refinancing’s closing costs with bond money the district received in 2010. More than $4 million in funds were earmarked then for capital improvement projects.

The district used about $3 million of that money to pay for its share of the Butler County Vocation Technical School’s $11 million renovation project.

The remaining $1.25 million was designated for use in Seneca Valley improvement projects, including building a new press box at NexTier Stadium, updating the school marquee outside the secondary campus in Jackson Township and

Because the district shelved  Burtner said district officials must decide what to do with the $1 million that had been reserved for the project.

The money must be used for capital improvements and cannot be used to augment the district's operating budget, she said.

Officials plan to decide next week on whether to use $100,000 of the remaining capital improvement money to pay for closing costs of refinancing the bonds. Doing so would save the district about $10,000 per year for the next 10 years, Burtner said.

The district would have until 2015 to decide what to do with the remaining $900,000 that had been set aside for the press box, she said.

In the fall, the board  taken out in 2004 for additions to the senior high school. The district also refinanced those bonds in 2007.

The move is expected in the next three years.