Schools

LASD Refinancing Saves Taxpayers $2.7 Million

What a difference a few percentage points make. The Los Altos School District reduced its rate of 4.93 percent down to 1.19 percent on $26 million in outstanding general obligation bonds, leveraging its strong credit ratings.

 

The Los Altos School District (LASD) announced it has successfully refinanced existing general obligation bonds, resulting in approximately $2.7 million in total savings to taxpayers over the next 10 years.

The district borrowed money at today’s lower interest rates to pay off bonds that carried higher interest rates, according to a LASD news release. All of the savings from the refinancing will be passed on to district taxpayers in the form of slightly lower property tax assessments.

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“The board takes its fiduciary responsibility to our highly supportive community very seriously,” said Superintendent  Jeffrey Baier in the news release. “With this action the board reaffirmed its commitment to maintaining sound public finances for our District and our community.”

The district took advantage of the historically low interest rate environment to refinance $26,145,000 of outstanding general obligation bonds, Baier said in the release. The interest rate on the outstanding general obligation bonds was 4.93%, while the interest rate on the 2013 Refunding Bonds was 1.19%.

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The district was able to achieve aggressive interest rates by maintaining its very strong credit ratings of Aa1 and AA+, according to the release. The very high ratings and the district's reputation in the market resulted in very strong investor demand for the 2013 refunding bonds, the release said.  

Moody’s Rating Service praised the strong management practices of LASD by stating, “During the past five years, when many districts were spending reserves due to funding cuts, the district has built a healthy level of reserves that provides it additional operational flexibility during periods of uncertainty.”  

Other local public entities have been taking advantage of the low interest rates, easing costs to tax payers. Last May, the Foothill DeAnza College District announced it had refinanced $78 million in general obligation bonds, with a savings of about $13.1 million through 2030.


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