INDIAN RIVER COUNTY — The Indian River County School Board Tuesday evening gave its financial team the green light to refinance various bonds – a move that could save the School District as much as $9.6 million over the next 15 years.
The School Board in 2005 issued approximately $80 million in what it calls Certificates of Participation with interest rates ranging from 3.5 percent to 5.0 percent. That $80 million was used for renovations at Vero Beach High, build the Alternative Education Center, construct a music wing at Sebastian River Middle, as well as purchase about 152 acres of land for the educational and administrative facilities at 66th Avenue.
To date, the District has paid down more than $26 million of the original bonds, leaving $53.7 million, which will mature in 2025. Of that, $49.85 million can be refinanced as of July 2015.
The School District’s financial team, which includes Ford & Associates, has identified an opportunity to refinance at a better interest rate, which would save the District an estimated $450,000 annually through 2025 – or $4.5 million over the life of the bond.
Jerry Ford, of Ford & Associates, told the School Board refinancing the bonds is similar to refinancing a house, with the exception that it does not push out the maturity date.
The School Board unanimously approved the refinance proposal as well as a request to bid out its 2010 issued Qualified School Construction Bonds for reinvestment purposes.
The Board in 2010 issued approximately $26 million in those bonds under the American Reinvestment and Recovery Act, which nearly covered the entire interest rate. The District has been making debt service payments on the $26 million into an account that pays interest – similar to a savings/investment account – and those funds will go to pay off the bonds at the end of the term, in 2029, as a “balloon” payment.
In the meantime, Ford and the rest of the District’s financial team identified an opportunity to invest the remaining payments and earn more in interest. If that opportunity materializes and is finalized, Ford said he expects the District to save $340,000 annually through 2029 – or $5.1 million.
Both moves together could net the School District $9.6 million in savings to its capital outlay funds, freeing up monies that could be used for future construction projects.