Groveport Messenger - March 20th, 2022

www.columbusmessenger.com
Refinancing saves district money
Groveport Madison Schools
saving “real money”
By Rick Palsgrove
Groveport Editor
Groveport Madison Treasurer Felicia
Drummey recently told the Groveport
Madison Board of Education on Jan. 26
that the district was able to save money by
refinancing some of its debt.
“It’s real money,” said Drummey. “It’s
real savings.”
She said the refinancing lowered the
interest cost on the new high school from
4.1 percent to 2.98 percent, which is an
estimated total cash savings over the
remaining term of bonds of $5.3 million, or
about $206,790 per year starting in 2023.
Additionally, the refinancing of the
administrative District Service Center
building lowered the interest cost from
3.69 percent to 2.26 percent, which is an
estimated total cash savings over the
remaining term of $813,285, or about
$62,000 per year starting in 2023.
“The high school’s existing average bond
interest rate is 4.10 percent, and the illustration
as of January reduces the rate to
2.98 percent, including refinancing expenses
(bond counsel, underwriting expenses,
etc,” said Drummey. “The refinancing of
the debt saves our taxpayers money, as
fewer taxes would need to be assessed to
repay this debt. Refinancing would result
in a savings of $5.3 million over the life of
the debt (or $206,790 annually) starting in
2023. Since the earliest date to sell at the
market is July 6, 2022, we are subject to
interest rate risk as market conditions will
change with inflation.”
Drummey said the financing of the
District Service Center was refunded as a
Direct Placement Forward Rate Lock with
Chase Bank at 2.23 percent, including the
refinancing expenses.
“This is a little lower than the projected
rate because we entered into a rate lock
agreement,” said Drummey. “The savings
is $832,829 (or $64,000 annually) starting
in 2023. This savings directly reduces the
district’s operating costs, thereby allowing
us to reduce expenses or redirect the savings
on debt toward long-term permanent
improvements.”
When asked why was it important to
the community for the district to do this
refinancing, Drummey replied, “It is
always our goal to be business-minded and
be good stewards of
the resources we’re
provided. Just like a
homeowner would
refinance their
home to reduce their
monthly mortgage
payment, the school
district can refinance
our debt to
reduce the interest
being paid. This
savings on interest
allows the district to
Marylee I. Bendig
“Your Southeast Connection”
reduce expenses or redirect the savings to
purchase more meaningful, long-lasting
assets or improve our facilities.”
Drummey said the refinancing does not
change the existing term by lengthening it
or shortening it. It will expire (be paid off)
as per the original schedule.
“When marketing conditions are favorable
to refinancing debt, it’s the most
responsible thing for us to do on behalf of
our taxpayers and the school district,” said
Drummey.
When asked if this refinancing will have
any impact on the level of property taxes
residents pay toward the debts, Drummey
said the refinancing of the high school’s
bond will be a direct reduction of property
taxes assessed by Franklin County for the
repayment of this debt.
“However, because the amount assessed
is spread among all residents and businesses,
the actual impact on each taxpayer
may go unnoticed,” said Drummey.
“Nevertheless, it’s the right thing to do, as
it’s beneficial to our taxpayers and the
school district.”
She said there are no other similar
debts the district has that can be refinanced
at this time.
“Each debt instrument has guidelines
that govern the type of debt issued and
when,” said Drummey. “For instance, if a
non-taxable bond has a ‘call’ feature, then
the earliest we can refinance the debt is
after the first call date. Otherwise, refinancing
before the first call date would
make the debt taxable to the investor,
which is less attractive and translates to
higher interest rates. As a result, we carefully
time the market to wait to refinance
until after the call date but before interest
rates rise.”
Drummey said district officials have
worked hard to carefully manage and
account for the resources we’ve been provided.
“The district is in a stable financial position,
so we believe we are worthy of a credit
rating upgrade from ‘Good Quality’
(Moody's A2/A3) to ‘High Quality’ Moody's
Aa3 or Aa2,” said Drummey. “An improved
credit rating is essential. Like an individual’s
credit rating, it determines what
interest rate is paid when borrowing
money. We submitted a credit rating application
and we expect to meet with the credit
rating agency in May to present our
financial position and case for an upgrade.”
580 Main St.
Groveport, OH 43215
Cell: 614-218-1097
Office: 614-836-2210
Fax: 614-836-2214
marylee@maryleebendig.com
March 20, 2022 - GROVEPORT MESSENGER - PAGE 3