Sale of Northville Public Schools' Refunding Bonds Expected to Save District $2.2 Million

- From a Northville Public Schools press release

Northville Public Schools will save taxpayers $2.2 million and make lower debt payments over the next 12 years after the successful sale of its 2012 refunding bonds. The Board of Education will adopt a ratifying resolution for the bond purchasing agreement at its regular meeting on Oct. 9, 2012. Northville Public Schools will have slightly lower debt service payments beginning in May 2013, and taxpayers will notice a lower school debt millage beginning with their 2013 tax bills.

Bond refunding is similar to a homeowner refinancing a mortgage to exchange high cost debt for low cost debt. The district is taking advantage of the current historically low long-term interest rates to issue the refunding bonds.

The new bonds will be used to redeem the $21.9 million in principal remaining from the $35.7 million bond proposal approved by voters in 2004 that paid for classroom additions at Ridge Wood Elementary School and Meads Mill Middle School; cafeteria/multi-purpose room additions at Silver Springs and Winchester elementary schools; a total roof replacement at Hillside Middle School; playground
improvements at Moraine and Thornton Creek elementary schools; and technology upgrades and other capital improvements across the district.

In preparing to sell the 2012 refunding bonds, Northville Public Schools, working with financial advisor Stauder, Barch & Associates, requested that Standard & Poor’s Ratings Services evaluate the district’s credit quality.

“Our district is able to sell these bonds because of our outstanding credit rating of ‘A’ assigned by Standard & Poor’s,” said Northville Superintendent Mary Kay Gallagher. “The rating agency cited our strong income levels, stable enrollment and low to moderate debt burden in its rationale for rating Northville Public Schools at the ‘A’ level.”

“The refunding of bonds at this time will translate into real savings for school district residents,” Gallagher added. “During these difficult financial times for our state and our schools, one of the primary goals of our Board of Education is to look for ways to achieve long-term savings without impacting the outstanding educational programs and services we offer our students.”

This is the second time in as many years that the district has taken advantage of the historically low long-term interest rates to issue refunding bonds. In August 2011, the Board of Education approved a bond purchasing agreement to redeem the $5.6 million remaining from the $27.5 million bond proposal approved by voters in 2001. The move saved taxpayers nearly $275,000 beginning with their 2012 tax bills, and lowered the district’s debt payment beginning in May 2012.

The financing of the most recent Northville Public Schools refunding bonds was conducted by the Michigan investment banking office of the brokerage firm Stifel, Nicolaus & Company, Inc. and Stauder, Barch. The district’s bonds were sold at a true interest rate of 2.32 percent, with a final maturity of 2024.

“Northville Public Schools’ bonds were well received by the bond market,” said Brenda Voutyras, Senior Vice President and Managing Director with Stifel, Nicolaus. “We were able to take advantage of current low rates that resulted in a savings level that exceeded the goals of the district and provided a very nice level of savings for taxpayers.”