PIEDMONT — About $12 million in bonds go up for sale by the Piedmont school district Monday.
In June, the school board authorized the sale of general obligation bonds for $12 million to restructure debt service and realize savings to Piedmont taxpayers. Superintendent Connie Hubbard has said that a bond sale such as this is a cost-effective solution, and the school board agreed. In May, the school board reviewed a number of repayment options for the $12 million it carried in Bond Anticipation Notes (BANs). BANs are short-term bonds issued with the expectation that proceeds of a future long-term bond will pay off the BANs.
The $12 million in BANs were issued in 2010 so that the district could remain within its statutory debt limit and keep its eligibility for low-interest Qualified School Construction Bonds. The BANs were also needed to offset the delay in receipt of state modernization funds due to the district. The BANs must be replaced with general obligation (municipal) bonds to stay within the assessed property value tax limit of $60 per $100,000 for Piedmont taxpayers.
Limited-tax general obligation bonds are secured by a local entity’s pledge to repay bond holders by levying a property tax sufficient to meet its debt service requirements up to a statutory limit. Being able to borrow at a lower interest rate can save taxpayers money over the life of the bond.
Moody’s Investor Service assigned a positive Aa2 rating to the school district’s general obligation bonds Series E (being offered in the bond sale). Moody’s has also affirmed the district’s other outstanding general obligation bonds totaling about $67 million that were issued over the life of the seismic repair projects at all the Piedmont schools. Interest from the bonds, being managed by underwriter Stifel Investment Services in San Francisco, will be free from state and federal income taxes. For information and to receive a preliminary official statement, call Stifel’s managing director Doug Heske at 877-779-9802.
