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TASB approves bond sale bid

“We went from an existing (variable) loan rate to a fixed rate and the fixed rate as it is now is one of the lowest that we’ve seen over the last 20 years or so.”
Dr. William N. Miller, superintendent of schools at Tyrone Area, offered that comment when asked why the school board decided to approve a bid for a $10 million bond sale last night. The winning bid came from Citigroup Global Financial Markets, LLC. The firm and several others participated in an on-line bidding process Tuesday morning.
The administration had looked at the idea of making the switch for several months, according to Dr. Miller. The bond is being used to finance the school’s $10 million middle school/high school renovation project and additions.
“It was a prudent decision to make,” said Miller. “We got into this issue six months ago. We wanted a fixed rate but it was not as inviting as it is now.”
He explained that the district should realize a savings that will then allow it to turn around and invest those savings.
“The market is excellent for us to move in on this fixed rate and it will make the district a sizable amount of money,” said Miller. “It’s going to be a really positive return for the district.”
Miller said the district was interested in a fixed rate since the idea of using bonds to finance the building project first came up.
“From day one we were interested in a fixed rate and that’s what we have done in the past,” said Miller. “We’ve always looked at a fixed rate over a period of time. We are very comfortable with where we are now. What it should do is strengthen our financial position.”
Last year, the district decided to borrow $10 million to finance the project after originally planning to use cash from its capital reserves. The school board’s decision to use a bond note gave the district the potential for saving money. The type of financing the district decided to go with last summer gave it an option of getting out of the financing quickly and either paying cash or using a different type of financing such as switching from a variable to fixed rate.
The general obligation bond approved last night is for a 10-year period.
The project will increase the square footage of the building by 25 percent. Once completed, fifth grade students will be moved from the elementary school creating a fifth through eighth grade population at the middle school level. Miller said the building project was “on target.”
“We are very pleased (with the progress),” said Miller. “We still see a completion date of April of 2006. Our intention is not to make a move until the (2006-07 school) year. The fifth grade will move at that point in time.”