Snoqualmie Valley taxpayers to get a break from refinanced bonds
September 2, 2010
By Sebastian Moraga
NEW — 6:00 a.m. Sept. 2, 2010
Snoqualmie Valley taxpayers will pay less each year on school bond repayments until 2020.
The Valley’s school board and Jon Gores, the school district’s financial advisor, made the announcement at the Aug. 19 school board meeting.
Gores said the district refinanced $30 million out of a $53.5 million bond issue from 2003 at a 2.43 percent interest rate, down from an original 5 percent.
“We are looking at interest rates at historic lows,” Gores said.
Board members had said in February and again in July that they wanted to refinance the bonds, and take advantage of the feeble economy’s low interest rates.
“A sluggish economy benefits interest rates, because there’s little fear of inflation and there’s ‘flight to quality,’” Gores said. “People want to buy secure investments, like U.S. Treasury securities.”
He called such securities “riskless.”
Gores said in July the district would OK the refinance if it achieved a 4 percent minimum dollar savings of the face amount of the bonds, in this case $30 million.
Four percent of $30 million is about $1.2 million and the district is looking at a savings of $2.3 million.
“Achieved savings are significantly above their target,” Gores said Aug. 30.
A second condition was that the refinancing could not affect in any way the district’s bond rating of Aa2, the third-best rating on a 10-item scale.
“The district had its bond rating reaffirmed, so it didn’t have any impact,” Gores said Aug. 30.
The only beneficiaries are the taxpayers, he said. No money goes to the district’s general fund.
The savings mean the district will levy less each year until 2020 to pay debt service —principal and interest — on the new bonds.
The amount taxpayers will save depends on what they pay in property taxes, Gores said.
The refinancing cost the district $188,602, he said. The district had expected a $240,000 cost.
The lowered rates go into effect Jan. 1, 2011, according to a district press release.
The 2003 bond’s original date is 2013, which is when the old bondholders will be paid, Gores said. The district will pay the new bondholders at the reduced rate.
The 2003 bond issue helped pay for Twin Falls Middle School, said Ryan Stokes, district director of finance services.
The bond also paid for the expansion of the gym at Chief Kanim Middle School and a fiber optic system for the entire district.
Sebastian Moraga: 392-6434, ext. 221, or smoraga@snovalleystar.com.
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