Just as many homeowners have refinanced their mortgages to take advantage of lower interest rates, the Archbold Area School District has similar plans.
The board will refinance $2,680,000 of outstanding bonds issued in 2000.
The bonds were issued to finance the addition of the 22,000 square-foot, 16- classroom academic wing to Archbold High School and 1,200 square feet of additional storage space for the industrial arts shop.
The move could potentially save the school district about $230,000 in interest expenses.
Voters approved issuing bonds to raise $3.3 million to build the two additions.
The vote also included placing a one-mill property tax levy on the tax bills to raise money to repay the bonds, plus interest, over 25 years.
When the bonds were sold to investors, the interest rate was 5.01%.
Speaking at the Monday, Aug. 16 Archbold Area School Board meeting, Christine Ziegler, district treasurer, said she had been informed by Patrick King, of the Stifel-Nicolaus Company in Columbus, that the bonds can be refinanced at an interest rate of about 3.36%, more than 1.5 points below the current rate.
King, who was originally with another company, has worked with the school district for many years, Ziegler said.
Refinancing the bonds is possible because the bonds are considered “callable,” meaning the school board can “call” them in from investors and pay them off early. Money to pay off the old bonds will come from the sale of new bonds.
In a later interview, Ziegler said, “It looks like we are going to be in a position to sell (new) bonds by mid- October. The entire transaction should be completed by the end of the month.”
While one mill was placed on the tax bills, today the effective millage is .9, or ninetenths of one percent.
Under Ohio law, a property tax cannot generate more money due to rising property values, so the county budget commission reduces, or rolls back, the millage. The reduced amount is known as the effective millage.
For tax year 2009, paid in 2010, the .9 mill will raise about $263,703.
The levy is due to expire in tax year 2024, which is payable in 2025.
When the $3.3-million bond issue was approved, voters agreed to a 1.1-mill property tax levy to repay the bonds.
At the same time voters were deciding on placing an additional 1.1 mills on the ballot, the county commissioners were reducing the millage on the 1987 $6.8- million bond issue, which was used to build the Archbold High School.
The rollback, or reduction, was 1.2 mills. That essentially meant little to no impact on property tax bills.
Voters approved the $3.3- million bond issue on Nov. 7, 2000. The unofficial, election night vote count was 2,227, or about 68.3%, in favor, to 1,034 or 31.7% opposed.
Brett Kolb, Fulton County auditor, said the Archbold school district currently has three bond issues outstanding.
The oldest, the 1987 high school bonds, had a voted millage of 5.7 mills. Today, the effective millage on the bonds is 1.3 mills.
During tax year 2009, payable 2010, the levy is expected to generate about $440,000.
The high school bonds were 23-year bonds, meaning that high school bonds will be paid off soon. The last collection for the high school bonds will be in property tax year 2010, which will be paid by property owners in 2011.
The school district also sold $9.391 million in bonds in 1996 to finance the construction of a new elementary school, plus renovations to the Archbold Middle School.
The original voted millage on those bonds was 4.12; today, the effective millage is 1.87 mills. In tax year 2009 payable 2010, the millage is expected to generate almost $644,000.
The last year property taxes will be collected to repay the 1996 bonds is 2021.
The last year property taxes will be collected to repay the 2000 bonds is 2025. – David Pugh