South Point schools refinance bonds
SOUTH POINT — In less than five years South Point school district has gone from receiving serious citations from the state auditor to getting top credit ratings from two investor services.
All that translates into a bonus for South Point taxpayers.
On June 28, the school district refinanced $7,785,000 of bonds originally issued in 2004 to fund construction of elementary, middle and high school buildings. The current interest rate is 2.89 percent annually compared with the original yearly rate of 4.43 percent. The interest rate reduction came about because of new crediting ratings for the district of AA- from Fitch Investors and A+ from Standard and Poor’s.
In late 2007, the district received 24 citations from then state auditor Mary Taylor that included noncompliance, material weakness and questioned costs. The state found the district inauditable because records were missing, incomplete or inaccurate.
“We are really happy with the ratings from both Fitch and Standard and Poor’s and it does reflect well on the current financial status and current oversight that the board has shown and the administration has shown to the district,” Tresa Baker, South Point treasurer, said.
Approximately $8.6 million was remaining on the original issuance with all but $866,000 that could be refinanced. By getting the lower interest rate there will be a savings of $536,000 over the remaining time period of the bond whose final maturity will be in 2031.
“The dollars that will be paid out, at some point all things remaining equal, the amount we would have to collect from the taxpayers because of our debt service will be less,” Baker said.
Voters passed the bond levy in 2004 to build four new buildings in the district including both elementary schools, with the issuance taking place the next year.
“If interest rates dropped again, we would have the ability to have the call feature in 2022,” Baker said.