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Taxpayers Will Save $9 Million From School Bond Resale

District pursues bond refinancing to save taxpayers money 

Savings for taxpayers are on the horizon, thanks to the district’s refinancing of bond issuances to capitalize on current low interest rates.

In 2018, voters overwhelmingly approved a $319.3 million school bond measure to replace three aging schools and fund capital improvements across the district. Previous capital bond measures were approved in 2013 and 2011. Bonds are sold to provide funding for projects as needed, and the interest rates on the bonds impact property tax rates for local taxpayers.

In 2020 the school board approved a resolution, recommended by district staff, to allow the district to pursue a resale of the previous bond issuances. Refinancing could generate savings for the district’s taxpayers, who would realize lower interest costs and debt service tax rates in future years if interest rates were lowered. The resolution defined strict parameters for a sale and could only be initiated if it yielded at least 3% debt service savings on the refunded bonds.

Eugene School District 4J is fiscally responsible and is seen as a secure investment, so 4J bonds are highly rated. The district regularly receives positive rating reviews and, with participation in the Oregon School Bond Guaranty program, has a bond rating of Aa1 by Moody’s Investors Service. A high bond rating and high demand provide opportunities to help taxpayers’ investment in our schools go further.

This fall, the district successfully refinanced $115 million of its voter-approved bond funds with federally taxable advanced refunding bonds. This bond sale will effectively reduce interest costs related to four of the district’s previous bond issuances: General Obligation bond series 2011A, 2012, 2013A and 2014.

Over the life of this bond series, 4J taxpayers are expected to see a tax savings of about $9.2 million. Savings will be focused in the years 2021 to 2024, with an expected reduction in the 4J debt service tax rate of about $0.13 per $1,000 of assessed property value in these years.

The sole purpose of this refinancing is to save costs for taxpayers. Eugene School District 4J did not benefit financially from this sale, and it will not save or generate funds that can be used for additional capital improvements.

This sale will reduce local property owners’ tax burden in the coming years and was made possible by highly favorable interest rates that allowed bonds to be refinanced at significant savings.

 

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