District refinances bond, saves taxpayers money

Troy Pierson, Business Manager

This past December, the Revere School District made the decision to refinance the school’s improvement bonds with the aim of saving taxpayers millions of dollars over the next three decades.

The resolution to refinance the school improvement bonds attempted to lower the interest rate on the bonds, which cover the cost of building the new Bath Elementary and Revere High School. Revere Local Schools’ superintendent Matthew Montgomery explained the background behind the opportunity to refinance.

“The school district partners with financial advisors who oversee our funds, and they provided a market analysis that determined that it would be an advantageous time to refinance the bond, even though the bond was still in its infancy, because we could save upwards of $10 million to the taxpayers. Upon receiving that consultation, the administration worked with the Board of Education to determine if that was something of interest, and it was determined in November that it was something that we wanted to pursue, even under such [a] tight timeline. . . . We had about thirty days to get this project underway because we had to have it completed prior to the end of the calendar year,” Montgomery said.

Montgomery also commented on the opportunity to refinance to reap the benefits of Congress’s recent tax reform.

“There was foreseeable volatility in the market due to changes or potential changes in tax law that was slated to be passed in December. So when we talk about the strength of the market, and capitalizing on the refinance when the market was doing so well, we wanted to make sure the transaction was done prior to any new tax laws. . . . Timing was extremely important, and that volatility was a hard thing to measure,” Montgomery said.

In addition to the district treasurer Richard Berdine, the school partnered with two entities, financial advisors Sudsina & Associates, and a bond legal counsel from Squire Patton Boggs to help with the process of refinancing. Berdine expressed the ease of access to partnering with the two teams, as the same two teams previously worked with Revere this past April to sell the original bonds to its group of investors.

“I chose [Sudsina & Associates and Squire Patton Boggs] for the refunding, but the district previously chose them to do the April sale, so we used the same parties. . . . I have been working with both of them long before Revere, so it just made perfect sense to keep them in place. They do good work, so we had no need or desire to change . . . for the fact that we were doing it on a short time frame. . . . [Their familiarity] with the district and me with them enabled us to hit that short timeline,” Berdine said.

The initial consideration for refinancing the bonds started in October. Once the three entities consulted a proposal to refinance with Montgomery, the Board placed the proposal on the agenda for resolution on November 21. President of the Board of Education George Seifert detailed the role the Board played in approving of the proposal.

“The only thing that [the Board of Education was] involved with in the whole process [was] when they came to us with the proposal of selling the school bonds, we all [agreed to pay it] and then we had to approve the sale once it [went] back out into the market,” Seifert said.

After the Board approved of the bond refinancing in a unanimous vote, the three financial entities worked on the refinancing process until its completion in mid December. Overall, the refinancing saves taxpayers a collective $365,000 per year, which equates to a savings of approximately $10.2 million over the remainder of the bond life. Montgomery clarified the meaning behind the numbers.

“A key factor that I would want the community to understand is the savings will be a benefit to the taxpayers, not the district. So the district won’t have $10.2 million dollars injected into their financial coffers, but rather that $10.2 million dollars will be not assessed from the taxpayers. So it’s a savings of $10.2 [million] for them,” Montgomery said.

Since the approval and completion of this refinance, the dates of groundbreaking for both Bath Elementary and Revere High School remain on track. Groundbreaking for Bath Elementary will begin in April 2018, and groundbreaking for the high school will begin in July 2018. In addition, a community forum will take place on February 26th at 6:30 pm in the high school auditorium to reveal the official plans for the new high school, as well as an update to Bath Elementary.