For Immediate Release: July 30, 2012
School bond refinance package to save $600,000
Oak Harbor School District took advantage of favorable interest rates to refinance its 2006 voter-approved bonds used to build Oak Harbor High School. The package will save $600,418 over the next 10 years, according to the bond underwriter D.A. Davidson & Company of Seattle.
Whidbey Island Bank was one of the largest buyers of the bonds, investing in $3.2 million of the nearly $9 million bond package. Skagit State Bank also purchased a portion of the bonds. Record low interest rates at the time were at 2.02 percent.
"We've been watching falling interest rates for months now, waiting to make a move when the time was right," said Superintendent Rick Schulte. "This means $600,000 in savings passed on to the community through lower property taxes collected on these bonds."
The district's high "Aa3" underlying rating on the bonds by Moody's Investors Service also contributed to the success of the sale, said David Trageser, senior vice president of D.A. Davidson and Company. "This is directly attributable to prudent financial management of the school district," Trageser said.
Moody's financial analysis cited manageable debt levels, stable employment, a diverse tax base, and community support as positive credit factors supporting the rating. The bonds also carried an enhanced rating by Moody's of "Aa1," because the bonds were sold using the State School District Guarantee Program.
Schulte pointed out that it's no coincidence that local banks stepped up to be a part of this refinancing package. "This illustrates the point about community support," he said. "We deeply appreciate Whidbey Island Bank being a partner in this transaction, which benefits the schools and the community."
The school board gave its approval for refinancing the bonds in February, setting a goal of interest rates at 3.5 percent or lower. The favorable Moody's report, along with careful timing, made the lower interest rate possible, Trageser said.