TEXARKANA, Ark. - The Board of Trustees for the school district here approved a resolution in a special meeting Monday night that would save the district more than $3.2 million by refinancing their bonds.
Jason Holsclaw with Stephens Inc. presented the resolution to the board encouraging them to refinance their 2017 Refunding Bonds at today's interest rates. Holsclaw gave no assurances as to the future direction of interest rates, but said if they hold, the savings could amount to approximately $3,254,867.
In 2017, the district issued about $42.8 million to pay off some existing debt and finance their new middle school. At that time, the district achieved a tax-exempt interest rate of 3.33% with a 30-year finance period.
For tax-exempt rates, refinancing would have to wait until the call date five years after the bond issue.
Taxable rates, however, can be refinanced prior to the call date and are low enough at this point to where the district saw fit to do so. The taxable interest rate Texarkana Arkansas School District would be looking at with this refinance is around 2.17%.
"Now, this is real savings in your pocket, if we're able to achieve the same interest rate levels through the bid process," Holsclaw said.
The majority of the savings would come within the next three or four years, Holsclaw said.
"This is very similar to refinancing your home," he said. "I'm basically going to have to refinance my home, but I'm going to have to pay the extra 20% or whatever the closing costs are on top of that. So, if I owe $200,000, then I'm going to have to pay $225,000. But my monthly payment is going down. You're basically financing that extra 25 over the life of the issue."
According to a schedule within the agenda packet, the bonds will be offered for sale Feb. 9 and the board will look to execute financing documents Feb. 16. The closing of the bond issue would be March 9.
"If we can, I'm going to try to move as quickly as possible, just because we don't know where rates are going to go," Holsclaw said. "The quicker we move, the better."