The Crossett School District’s board of education moved Monday to begin the process of refinancing the bonds that paid for the new Crossett High School.
Jason Holsclaw with Stephen’s Public Finance appeared before the board at its regular July meeting, telling the members that of the $31,435,000 originally financed for the project, approximately $28,975,000 is still outstanding.
Holsclaw said that the initial bond was financed at 2.78 percent interest, and that while that interest rate was low in 2016, there is a chance now that an even lower rate can be acquired with a refinancing. The five-year period the district had to complete at the original rate will be up in December, allowing for a refinancing if the board moves forward.
Holsclaw said the school district has two possible options for financing. The first of those options was level debt service, which would spread out the savings across the life of the bond at approximately $75,000 annually.
The downside of that plan would be that if the school district wanted to refinance its bond again later, it would lose some of the savings from this refinancing, he said.
The second option is accelerated savings, which allow the district to see significant savings in the first couple of years by restructuring how much bond principal is paid per note.
“You will pick up a lot of money very quickly, but the con is that your payments will go up very quickly after a few years,” Holsclaw said.
It’s also possible to do some kind of hybrid of the two options, he said, but that decision can wait until the process of selling the bonds gets closer.
“We hope to sell the bonds on Aug. 31; at that time we will get bids from investment banks across the country and they will tell us what their bids are, and unless they do something funky we are going to go with the lowest bid,” Holsclaw said. “If rates skyrocket you can reject bids. Don’t think that tonight, if you authorize this resolution, that you are locked in.”
Board secretary Eddie Goodson made the motion to begin the process, and member Debra Barnes seconded it. The motion passed unanimously.
Board member Katie Jordan was not present at the meeting.