ASHLAND — Taxpayers in Ashland City School District will see a little decrease in their bills soon.
District officials recently refinanced a 2013 bond, which was issued to pay for the construction of Reagan Elementary and Ashland Middle schools.
The technical term is known as bond refunding, said Kyle Klingler, the district’s treasurer.
“It’s when you issue new debt to pay off old debt, and then we get a refund because of the new debt’s low interest rates," he said.
The district’s new debt of $27.5 million will be paid off under a new, low interest rate of 2.26%. The old interest rate sat at 3.8%.
The move means the district will experience nearly $229,000 a year through 2049, the bond’s maturity date. It also means the savings will be spread out among homeowners through the district and those savings could be realized by 2022’s first tax bill in March, Klingler said.
Individual tax bill savings will vary, he said.
The announcement comes at a time during a national surge in bond yields amid talks about the Federal Reserve slowing its monthly bonds and mortgage-backed securities purchases, known in the financial world as “tapering.”
The Fed began those monthly purchases, to the tune of $120 billion, last year to curb the pandemic’s financial hit to the nation. The move was done to stabilize markets and resulted in low interest rates — hence the school district’s opportunity to refinance a 2013 bond.
The refund will come with a price tag, however.
Ashland City Schools hired Stifel, Nicolaus & Company in 2020. The St. Louis firm, which has offices in Columbus, charged the school district a one-time fee of $157,613 for the refunding service.
Klingler said Stifel's fee was taken out of the bonds when they were issued in May. The remaining $221,469 was delivered to the district, he said.
Patrick King, the company’s managing director for its public finance arm, said Monday the district’s savings are significant, compared to what the firm typically sees.
He said Ashland will have another similar opportunity in 2031 to refinance the bond.
“Interest rates just seem to keep going lower and lower and these opportunities are still happening,” King said.
Board president Zack Truax commended the administration for its hard work.
“This saves the taxpayers money — it’s another example of how the folks in our leadership are fiscally conservative. They care about the taxpayers. But not only the taxpayers, but making sure that our kids get the best education they can for the dollars,” he said.