Schools

Castro Valley Unified School District Reduces Taxpayers Bills

District takes advantage of historically low interest rates to refinance bonds

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(Piece has been lightly edited for Patch style)

Castro Valley Unified School District Board of Education took advantage of historically low interest rates in the municipal bond market to refund nearly $18 million of the district’s outstanding bonds on Jan. 31 and saved taxpayers more than $3 million over the life of the bonds.

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Similar to refinancing a home to a lower interest rate mortgage, proceeds of the
new bonds are used to “pay-off” the older bonds. With municipal bond rates at historic low rates and the district’s high quality credit rating (AA-) from Standard
& Poor’s,
the district was able to refinance at an all-in cost of 2.48 percent compared to interest rates ranging from 4 to 5 percent on the original bonds issued in 2002, 2003, and 2004. The lower interest rates reduce the debt service payments, which results in a savings to taxpayers.

KNN Public Finance managed the refinancing as the district’s financial advisor, and worked with the underwriting firm of De La Rosa & Company to help secure historically low interest rates.

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The refunding reflects the commitment of the Board to the District’s taxpayers
who generously approved bonds in separate elections in 1998 and 2002. While the refinancing will not affect the district’s operating costs or help to solve any current budget issues, it does represent the district’s ongoing commitment to the taxpayers to prudently manage the district’s finances.

This is not the first time that the district has refunded bond when a drop in interest rates resulted in a net savings to the taxpayers. In 2006, the district refunded existing bonds for a savings of $1.7 million. Combined with the current 2012 refunding, the district’s efforts to refund the bonds have saved taxpayers a little more than $5 million in interest payments on the bonds.


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