District Refunds $9.4 Million in Bonds

Even the Sumner School District is getting in on the refinance craze.

The district refunded $9.4 million in outstanding 2003 general obligation bonds Wednesday, saving taxpayers 5.61 percent on those bonds.

General obligation bonds are a financing tool that school districts and other local government agencies use to construct, improve or acquire facilities like schools. School districts must gain voter approval before issuing bonds.

“When we say we are refunding the bonds, it’s like refinancing,” said Ann Cook, district communications director.

The savings will amount to $570,535 over the next 10 years, said Jon Gores, senior vice president for D.A. Davidson and Co., which was tasked with refunding the bonds and achieving a savings of at least 5 percent. The bonds have a maturity date of June 1, 2022. 

“Interest rates created this opportunity,” Gores said, noting that new interest rate on the bonds is 2.38 percent. The original bonds were sold at a 4.5 percent interest rate.

Gores said the savings will accrue each year to taxpayers in the district.

“The true benefit here is for the taxpayers,” he said, noting that the savings flow directly to taxpayers through reduced tax levies and are not available for the district to expend.

Taxpayers should not expect to see huge reductions in their property tax bills, however, notes Cook.

“For the average taxpayer the difference is pennies,” she said.

Nonetheless, Gore said the move indicates the district is working to be a good steward of taxpayer dollars. The district was able to make the move and still retain its bond rating, which Gores characterized as high.