Buellton Union School District recently completed a refinancing of the outstanding debt on its bond anticipation note that’s expected to save taxpayers more than $1.5 million, district officials said.
Interest rates at the time of the sale in mid-July were near historic lows and contributed to the short-term program to save taxpayer money.
In June of 2012, Buellton Union School District voters approved Measure V2012, a $3.2 million local bond issue to improve school facilities at Jonata Middle and Oak Valley Elementary schools.
A few months later, the district sold a bond anticipation note, or BAN, to provide immediate funding for school upgrades, said Randy Haggard, district superintendent.
Over the last few years, the district completed a number of projects, including installing a solar power plant that is producing all the district’s current electrical needs, adding infrastructure for instructional technology and purchasing computers and devices to give students tools for 21st century learning, Haggard said.
“The BAN was a tremendous benefit because it allowed the district to lock in low construction costs, to provide improved school facilities for students sooner rather than later and to borrow money at an extremely low interest rate of 2 percent,” he said.
One of the campaign pledges at the time of the election was that property taxes would not be levied until an older bond, approved by voters in 1992, was off the tax roll.
The 2016-17 fiscal year was the final year of the 1992 bonds, and Measure V2012 bonds have now been sold to pay off the BAN, Haggard said.
At the district’s Jan. 11 board meeting, refinancing options were presented by district financial advisor Jon Isom that compared combined tax rates — including the 2004 bonds — as well as length of program and total tax payments.
The independent Citizen’s Bond Oversight Committee, whose members were appointed in 2012 to oversee Measure V2012 expenditures, unanimously concluded the district should choose the option of a shorter debt service to save the community money over the term of the bond repayment.
The 2016-17 tax rate was $54.35 per $100,000 of assessed value for the 1992 and 2004 bonds.
The option selected by the school board had an average tax rate of $61.74 per $100,000 of assessed value but the shortest repayment term of only 11 years, Haggard said.
“This option was especially attractive because it has the lowest total repayment of approximately $4.4 million, a savings to the taxpayers of $1.5 million over the term,” he said.
Haggard noted “a good comparison might be to the difference between a 15-year mortgage and a 30-year mortgage. The 15-year mortgage has higher payments than a 30-year mortgage but will save you a lot more money through lower interest rates and a shorter term of repayment. We are glad to be able to accomplish this kind of savings for the Buellton community.”