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District school bonds refinanced



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February 01, 2012 - By Joe St. Henry

Review Editor

Orion Township taxpayers will be saving $6.1 million over the next 15 years - the bulk of it during the next six - thanks to refinancing of a portion of the Lake Orion Community Schools' bond debt.

According to John Fitzgerald, the district's assistant superintendent for business and finance, a favorable interest rate environment coupled with the fact that the district had $25.4 million in callable bond debt enabled the district to refinance this amount.

"We took advantage of lower interest rates and a slighter shorter timeframe to pay off the debt," he said. "The end result is taxpayers are realizing $2.7 million in direct debt savings and a reduction of the district's school loan revolving fund liability of $3.3 million."

Taxpayers originally approved the district's school building and site bonds in 2002, payable beginning May 1, 2013 through 2018. Lake Orion schools now have a total proposed and existing bond debt of $121.4 million.

"It's the responsibility of the district to periodically review refinancing options to determine if there are opportunities for savings to the district and taxpayers," said School Board Treasurer Jim Weidman. "John's effort to complete a comprehensive review of our options provided significant savings to the public by shortening the obligations of the bonds."

Fitzgerald noted that not all districts with bond debt can take advantage of the current interest rate environment because they may not have structured such callable bond flexibility into their bond issuances.

As part of the process, Standard & Poor's Rating Services evaluated the credit quality of Lake Orion Community Schools and affirmed the district's outstanding underlying rating of AA-. The rating agency cited the school district's strong income levels, very strong reserves and overall low debt burden in its rationale for maintaining the rating of the school district.

"I want to recognize John for his sensational job at saving our taxpayers this kind of money," Superintendent Marion Ginopolis said. "It really is remarkable."

Fitzgerald added that the next opportunity to possibly refinance callable bonds may arise in 2016, depending on the interest rate environment at that time.

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