SHENANDOAH - The Shenandoah Valley Board of Education approved at Wednesday's meeting the refinancing of nearly $5 million in bonds, which will save the district more than $200,000 over an 11-year period.
The aggregate principal of the general obligation bonds is $4,840,000, which is a portion of the original principal of $15,825,000 borrowed in 2009 for the construction of an extension to the education complex to add 34 rooms to deal with overcrowding in the classrooms.
Since the school district was able to get a partial reimbursement from the state Department of Education, other work was included in the project, including upgrades to existing facilities due to age or to modernize. It included a new elevator for the high school and new roof on the elementary building. The project also included the demolition of the bus storage/maintenance garage (former Tri-Way Metalworkers building) and the purchase of the adjoining laundromat and land to better accommodate the construction plan.
The resolution was adopted on a motion by Helene Creasy, seconded by Daniel Salvadore. The vote was 6-0.
After the vote, RBC Capital Markets managing director-municipal finance Henry J. Sallusti and bond counsel Rhoads and Sinon LLP attorney Jens H. Damgaard spoke to the school board.
"This is the second leg of the refinancing," Sallusti said. "We refinanced bonds last April. The refinancing tonight will save $207,669. The closing will be on Feb. 25, 2014."
Board member Thomas Twardzik asked him to explain the role the S&P rating agency had in the process.
"Whenever you have a bond issue, the rating agencies would like to talk to the district," Sallusti said. "We had a phone call with Tony Demalis, your business manager, who did an absolutely fantastic job answering all the questions. After the call, the analysts called back and said what a great job that Tony did and spoke highly of the district and how well run it is."
Damgaard spoke briefly about the resolution that would be adopted last evening and about a subsequent related resolution that will be prepared for adoption at the next meeting to complete the bond process.
After the meeting, Demalis said that this was the second refinancing of bonds issued in 2009 for the construction project to add 34 rooms to the education complex to deal with overcrowding.
"In 2009, we borrowed almost $16 million in bonds. The project came in under budget," Demalis said. "Last year, we refinanced $10 million worth of the bonds at a lower interest rate. There was a certain amount left over that we didn't refinance because there was a special offer for issues that were $10 million or under, so it benefited us at the point, so we did it."
Demalis added that the school board passed a resolution last year that if the district could save three percent or more on the bonds, then the board would act on refinancing the remaining 2009 bonds.
"We're still going to pay it off in the same amount of time (2014 to 2022), however the interest rate went from a low of 2.4 percent to a high of 4.4 percent, to a low of 0.33 percent and a high of 2.7 percent," Demalis said.
He said that the school district will save 4.53 percent overall with the refinancing at this time. In the previous refinancing, the district saved about $2.4 million in payments because the district did not spend as much as expected due to the low bid amounts. The initial estimates had the school district borrow $15,825,000, but the low bid came in at about $12.5 million.
"We saved a little more than $2.4 million in payments because of the amount that we didn't spend in the construction project," Demalis said.