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Refinancing $29.4 million bond issue approved

The Sweet Home School Board approved a bond resolution Tuesday that gives the board president authorization to refinance serial bonds, potentially saving the district a projected $864,000 over the next 15 years.

The board unanimously approved a resolution that authorizes underwriter RBC Dain Rauscher of Minneapolis to refinance a bond the district signed in 2002. The 20-year bond for $29.4 million was signed to finance part of the district's capital improvement project.

A balance of about $25.5 million remains on the serial bonds.

"It's like refinancing your mortgage," said Thomas Miller, the district's director of finance. "We get one opportunity to do this, so we're looking in to the savings we can realize by refunding."

Before voting on the resolution, board member Dirk Rabenold asked Miller and Superintendent Geoffrey Hicks whether the district could cancel the deal if the actual saving of refinancing the bonds turns out to be significantly lower than the underwriter's estimate, due to market fluctuations.

"There are a lot of moving parts to this," Rabenold said, in reference to the 5 1/2 -page resolution. "I think we, as a board, should say if the savings aren't at a certain level, should we go forward? If they don't achieve the savings, and we say no, what is our out?"

Hicks said the resolution does not lock the district in to refinancing the bonds, if the actual market value falls short of the estimate provided by RBC Dain Rauscher. Board President Michael Morrow has the authority to sign off or reject the offer, Miller said. If the offer is rejected, the district would still have to pay the bond adviser and underwriter for their time, Hicks said.

Miller said there is no firm deadline for Morrow to approve or reject the plan and that any time frame will be based on the bond market.

The School Board had issued a request for proposals for underwriters to examine the bond refinancing Dec. 19. The board officially selected RBC Dain Rauscher's proposal and draft refinancing plan Tuesday.

"I'm OK with this as long as we have an out," Rabenold said as he voted in favor of the resolution. "If we don't like what the underwriter comes back with, we can say no."

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