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Post by EagleDad on Jun 16, 2006 11:24:30 GMT -6
Email just sent out by the district:
The Board of Education approved the sale of $60.75 million in bonds that will be used to construct the district's new high school. Dave Holm, Assistant Superintendent of Business and Finance, said the district received a lower interest rate than projected, which translates to a savings for the taxpayers. "The district is borrowing money at a lower interest rate on its loan. We projected 5 percent, but we were able to get a 4.55 percent interest rate." Holm said the lower rate translates to a significant savings over the loan's term. The district was able to secure a lower rate due to the strong financial rating the district received from Moody's Investors Service and Standard and Poor's.
This is the first of several bond sales that will be used to fund construction approved through the $124.6 million referendum passed in March. If the district continues to be able to secure lower interest rates it may not be necessary to sell the entire $124.6 million in bonds.
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Post by bob on Jun 16, 2006 11:54:56 GMT -6
A lower rate and possibly selling less bonds.
The SD lied, they said 5% and $128 million. How can we trust them with our money?
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Post by EagleDad on Jun 16, 2006 12:00:50 GMT -6
Yes, we need an investigation into this.
Who will be held resposible?!? Where's the accountability?!?
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Post by gumby on Jun 16, 2006 18:50:27 GMT -6
I'm sure Oxford Bank is somehow going to benefit--those thieves!! It's a conflict if interest I tell you.
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Post by wvhsparent on Jun 16, 2006 19:16:22 GMT -6
ROTFLMAO
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Post by oldprof on Jun 16, 2006 19:26:34 GMT -6
Yes, it is worth a good laugh!
The CFAC had checked this out quite carefully. I posted on this site that the impact of the borrowing on rates would be very small.
The estimates by us and by the administration were always conservative -- intended to be honest and not lowballing the borrowing costs.
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Post by dpc on Jun 17, 2006 14:55:08 GMT -6
Yes, it is worth a good laugh! The CFAC had checked this out quite carefully. I posted on this site that the impact of the borrowing on rates would be very small. The estimates by us and by the administration were always conservative -- intended to be honest and not lowballing the borrowing costs. Doesn't it strike anyone as odd that they are issuing bonds when they haven't secured the land? What will the $61M be used for? How much interest expense will accrue on the bonds until the money is put to use? oldprof - do you know what the scoop is on this? |
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Post by EagleDad on Jun 17, 2006 16:20:50 GMT -6
There we go  DPC, I'm sure architects, land surveyors, etc don't work for free. Just 'cause dirt hasn't been turned yet, I wouldn't assume there are no costs. I'm sure the secured the first bond partially to cover these costs, and partially because interest rates are favorable (and only going in one direction from here). |
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Post by gumby on Jun 17, 2006 18:46:32 GMT -6
ED, clearly there is some type of conspiracy out there. Somebody, somewhere, is doing something to somehow take advantage of this whole referendum thing. How can anyone not see this--oh the humanity . . .
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Post by bob on Jun 17, 2006 19:04:01 GMT -6
Heck, I am glad they issued the bonds and got 4.5%.
Pay the bond holders 4.5% receive 5% from the bank or invest in US government bonds. Heck they could loan it overnight to other banks at Fed Funds rate 5.0 % and make money.
That's called the power of interest, the yield curve being as flat as a pancake and the federal tax break on muni bonds.
If they could issue more bonds at 4.5% and lock in 30 year US treasuries at 5.00% they should do this until the cows come home.
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Post by dpc on Jun 18, 2006 6:25:49 GMT -6
If they could issue more bonds at 4.5% and lock in 30 year US treasuries at 5.00% they should do this until the cows come home. No they can't since governmental entities, by law, are not able to arbitrage any borrowed monies (meaning they can’t borrow money at x% and invest those funds at a higher rate of x+%) until the borrowed monies are utilized. If they do so, they will be subject to fines and penalties. Hence my question to OldProf: Since we have not yet paid for the land and don’t know when that payment will be made, what will the $61M be used for in the meantime? I think this is a fair question and I’d prefer to hear a response from OldProf or someone who sits on the CFC rather than someone else’s speculation (no pun intended ;D). |
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Post by wvhsparent on Jun 18, 2006 6:51:32 GMT -6
While I am not buying into any conspiracies, and I am sure the monies will be used for something needed before the land is purchased....I too had wondered the same thing dpc did. I think we just need to let the SD know that we all thirst for info. An extra line of the press release could have stated the initial usage of the funds....do you agree?
It's hard to break old habits and the SB/SD has a habit of not providing all the info.
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Post by bob on Jun 18, 2006 7:05:30 GMT -6
Boy, does that law needs to be changed.
They probably take some money and pay for the architects, city approval and take the balance and put it in the bank.
So they can't invest at a higher interest rate so then they invest at the same rate so no profit but no loss. The bonus is that they got a great rate when interest rates are rising.
I guess we should just wait until muni rates are 5.00 -5.5% so then we can read the next SD/admin is incompetent post on how the SD are paying higher rates then planned for.
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Post by wvhsparent on Jun 18, 2006 9:07:02 GMT -6
Boy, does that law needs to be changed. They probably take some money and pay for the architects, city approval and take the balance and put it in the bank. So they can't invest at a higher interest rate so then they invest at the same rate so no profit but no loss. The bonus is that they got a great rate when interest rates are rising. I guess we should just wait until muni rates are 5.00 -5.5% so then we can read the next SD/admin is incompetent post on how the SD are paying higher rates then planned for. Part of the reason for the law was the politicians. They would do just as you say, but then instead of the governmental agency benefiting from the interest rate differential, it was the politician. Try not to be so bitter bob.....JK  . ;D I think they can bank the monies for a short term, but any interest made has to be accounted for and put back into the school or used to service the debt, but it cannot be used as a source of income. |
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Post by gumby on Jun 18, 2006 9:22:58 GMT -6
All I can say about this discussion is that the SD cannot win for losing.
With the projected build start date relatively close at hand, and knowing that money is necessary very early on, I think paying for all the myriad costs associated with construction is a reasonable assumption.
I would be willing to bet that information will continue to trickle out. Yes, the SD could be me forthcoming, but I do not think there is any evil intent there.
Hopefully some day people will come to accept that the referendum passed and that we need to stop attributing evil intent to all things SD (not you WVHSP--but there are others on here).
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. ;D