June 10, 2016
Earlier this week, the Orinda Union School District sold $8.16 million of refunding general obligation bonds in order to generate savings for taxpayers. The financing will close later this month on June 22, 2016.
Due to historically low interest rates in the municipal bond market combined with high investor demand for the District’s bonds, the refinancing resulted in savings greater than expected. Investor reception was further helped by a credit upgrade from Standard & Poor’s to “AA+,” the highest rating of all Contra Costa County school districts. Through this refinancing, property owners in the District will save over $975,000 (in today’s dollars), which equates to roughly $120 for the median homeowner in the District over the remaining term of the bonds (based on fiscal year 2015/16 assessed value data).
In a school district general obligation bond refunding, similar to refinancing a home mortgage to a lower interest rate, proceeds of the new bonds are used to retire the older bonds. Unlike refinancing a mortgage, the term of the original debt is not extended. With municipal bond rates near historic lows, the District was able to refinance at an all-in cost of 0.97 percent compared to prior interest rates ranging from 4.5 to 5.0 percent on the original bonds issued in 1998 and 2001. The lower interest rates reduce the debt service payments, which results in savings to taxpayers.
The refunding reflects the commitment of the Orinda Union School District Board of Trustees to manage its bond program, which is funded by taxpayer dollars, effectively. As the 1995 bond measure is paid off in the next 6.5 years, this refunding is a final step to ensure remaining payments are as low as possible. The results of this bond sale highlight the District’s high credit rating as a result of sound fiscal management, and its stewardship of the taxpayers’ interests.
Regarding the District’s credit rating upgrade and subsequent savings to taxpayers from bond refunding, Board President Julie Rossiter stated, “The Orinda School Board takes its fiduciary responsibility seriously. We know that Orinda taxpayers count on us to be dedicated stewards of public funds, and the District’s recent credit rating increase and bond refunding results demonstrate our commitment to meeting those expectations.”
According to Dr. Carolyn Seaton, Orinda USD’s new Superintendent of Schools, “While numerous factors contributed to the district’s increased credit rating, strong community support and a history of fiscally sound budgetary practices were undoubtedly significant factors in the ultimate decision to award Orinda USD with an AA+ rating.”
Orinda USD’s Director of Business Services, Teresa Sidrian, added, "The refunding of the bonds was executed through a competitive bid process. I was thrilled to learn that the interest rate from the winning bid came in so low, and that the citizens of Orinda will benefit from lower property taxes.”