BUSD authorizes issuance of refinancing bonds

In November 2005, the voters of the Bonsall Union School District authorized the issuance of $17 million of general obligation bonds for the repair and rehabilitation of Bonsall's public schools and the construction and acquisition of classrooms and other facilities. The bond debt obligation was transferred from the Bonsall Union School District to the Bonsall Unified School District when the district transitioned from a K-8 elementary school district to a K-12 unified district in 2014. On April 22, the BUSD board voted 4-0 to refinance the outstanding bond amount at a lower interest rate.

"We should be able to save the taxpayer about four or five hundred thousand dollars by going to a lower interest payment," said BUSD superintendent Justin Cunningham.

The bonds were sold in 2006 and 2007, and the remaining principal and interest payments are being generated by a property tax assessment on Bonsall landowners. The April 22 board action authorized the issuance of up to $7,500,000 in re-funding bonds contingent upon a market interest rate which will provide a net savings of at least 3 percent in addition to covering the cost of issuance.

Dale Scott of Dale Scott & Company gave a presentation at the Jan. 13 BUSD board meeting which included information about the possibility of refinancing the existing general obligation bond debt and also about funding the district's future expenditures. Scott indicated that continuing low interest rates may allow some of the school district's outstanding general obligation bonds to be refinanced at a lower rate, which would create a tax savings for the district's property owners.

Dale Scott & Company estimates that the actual net interest savings from refinancing the general obligation bonds would be $487,000. The $682,000 in gross savings would be offset by a $195,000 issuance cost consisting of the $75,000 financial advisor fee, $55,000 for underwriting costs, $35,000 for bond and disclosure counsel, $10,000 to establish a credit rating for the school district (although the former K-8 Bonsall Union School District had a credit rating, the new unified district does not yet have a credit rating), and $5,000 for miscellaneous expenses.

Voter approval is needed for a general obligation bond whose principal and interest payment revenue is generated from a property tax increase, but no voter approval is needed for certificates of participation. The district plans to use certificates of participation to fund the construction of a two-story building on the Sullivan Middle School site, which is also the initial site of the high school.

The two-story building would initially be used for the high school, and after the school district builds a high school on its Gird Road property the new building would be used to accommodate the expected middle school enrollment growth. The district also collects developer fees to fund school construction resulting from development; developer fees can be applied to past or future construction of new facilities added to accommodate the increased enrollment.

A 3-0 BUSD board vote March 10, with Timothy Coen and Sylvia Tucker absent, approved an agreement with Dale Scott & Company for financial advisory services including the potential refinancing of the general obligation bonds and issuance of certificates of participation to finance the two-story building.

"We look forward to saving the taxpayers some money," Cunningham said.