November 28, 2017
Millbrae School District 555 Richmond Drive Millbrae, CA 94030 (650) 697-5693
Millbrae School District Refinances Existing Bonds to Save Taxpayers Over $1.6 Million On Thursday, October 19, the Millbrae School District refinanced existing bonds to take advantage of low interest rates in the municipal bond market.
The District refinanced approximately $6.9 million of outstanding bonds, which saved taxpayers over $1.6 million in total debt service savings over the remaining life of the bonds. The financing closed on November 16, 2017. The refinancing was successful due to high demand for the District’s bonds and the District’s high quality credit rating (‘Aa1’ from Moody’s Investor Services). The rating places the District among the top 15 percent of California school districts rated by Moody’s, and reflects the District’s conservative financial management practices resulting in a strong financial position. Additionally, the bonds were designated “bank qualified,” which provides favorable tax treatment for banks and, thus, increased the pool of potential investors. In a school general obligation bond refunding, similar to refinancing a home to a lower interest rate mortgage, proceeds of the new bonds are used to retire the older bonds. The lower interest rates reduce the debt service payments, which results in savings to taxpayers. The bonds were refinanced without extending the term of the prior bonds. This transaction reflects the Board of Education’s stewardship of taxpayer funds, by minimizing debt service costs for the District’s outstanding bonds. Richard Champion, the District’s Chief Business Official, reiterated that “Our top priority is to be good stewards of the funding that our community granted us through previous bond measures.” This marks the second time the District has refinanced bonds in the last two years. In 2016, the District refinanced approximately $8.5 million of outstanding bonds and saved taxpayers approximately $1.5 million. Combined, these two refundings have saved Millbrae taxpayers approximately $3.1 million.
Prepared by KNN Public Finance