2016-07-08 / Schools

District refinances bonds at lower rate

Simi Valley Unified School District priced refunding bonds on June 29, locking in property tax payer savings of $13.6 million over time. Interest rates were at near historic lows, which allowed for the refinancing opportunity.

The prior bonds that were refunded by the current issue were issued in 2007 in a higher interest rate environment. Interest rates on the prior bonds ranged from 4.5 to 5 percent. The true interest costs on the newly issued refunding bonds were 1.9 percent.

The difference in borrowing costs allowed the district to lower the cost of interest over the remaining bond terms. All of the savings will be passed on to local property tax payers.

“We are so appreciative of the support that our community provides to our local schools,” SVUSD Superintendent Jason Peplinski said. “We wanted to make sure that the savings that are generated by the refunding entirely and directly benefit our district’s taxpayers.”

As part of the refinancing, the district received a rating upgrade from Moody’s on its general obligation bonds to “Aa3,” affirming the district’s improved financial position and strong community profile.

The district also received a rating of “AAA” from Fitch Ratings on the refunding bonds.

Ron Todo, the assistant superintendent of business and operations, said the “strong ratings on the district bonds allowed the district to attract more investors and lower the borrowing cost.”

“We are very pleased that we were able to lock in interest rates in one of the best markets for bond issuers,” school board president Scott Blough said.

Property owners in the district will see a reduced property tax rate on future tax bills.

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