Point Pleasant Borough Schools Spokesperson Jacquelyn Goss released this post updating the cost of bonds to finance the recently approved school referendum.
The cost came in under original estimates, after a bidding war lowered rates to 3.55 percent interest on the bond notes.
The complete cost to finance the project, which will replace roofs and boilers in Point Pleasant schools, would be $15, 948,000.
Goss said the competitive bidding will save $864,000 over the 20-year bond term.
Here is her complete post as released by Point Pleasant Schools:
The Point Pleasant Borough School District completed a major step toward securing the funds necessary to undertake the capital improvement projects under the recently approved bond referendum, with the selling of the bonds to investors last week. The bonds were sold in a competitive sale, yielding better than anticipated results that will save taxpayers more than three-quarters of a million dollars by the end of the 20-year bond term.
Bidding was frenzied for a time as a number of big-name municipal bond investors competed for the privilege to become the district’s bondholder. Among the firms submitting offerings to purchase the bonds were Bank of America, Merrill Lynch, PNC Capitol and others, but it was municipal bond broker-dealer Roosevelt & Cross, who emerged the victor.
Roosevelt & Cross, Incorporated surpassed the five competing firms as the low bidder, offering to purchase the bonds at an interest rate almost one half of a full percentage point under the 4 percent that was projected by the district’s financial analysts. The district will pay Roosevelt & Cross just 3.55 percent to finance the $15, 948,000 necessary to complete the critical repairs to the roofs, heating & ventilation units at Point Pleasant Borough’s four schools as specified in the referendum, saving $864,000 over the 20-year bond term.
The reason for the fierce competition was due largely to the recent upgrade to the district’s credit ratings by Standard & Poor’s. S&P ratings determine a district’s creditworthiness by comparing relative risks of different debt issues with estimates of the district’s ability to pay debt service. Earlier this month the ratings giant awarded the district an AA rating, just one tier below the highest possible rating and indicative of the district’svery strong capacity to meet financial commitments according to Standard & Poor’s.
Point Pleasant Borough School District School Business Administrator Steve Corso said the District is the one of just a handful of Monmouth and Ocean County school districts to achieve the coveted AA designation.
“In making their determination, Standard & Poor’s cited the Board of Education’s consistently strong financial performance and maintenance of very strong total general fund balance as the rationale for the Double-A award,” Mr. Corso said. “This designation is a testament to the Point Pleasant Borough School District’s ability to maintain a high level of fiscal responsibility and stability despite continued market volatility and economic uncertainty.”
“While interest rates are generally predicated on market conditions, and continued low interest rates in the bond market were expected to some degree, it was the district’s bond rating that was instrumental in achieving such a favorable rate, lower than our original projections,” he said. “The AA rating is an affirmation of the district’s creditworthiness and fiscal responsibility, making the district’s bond package attractive to investors.”
According to Mr. Corso, some additional factors that contributed to the favorable interest rate were the district’s strong history of meeting financial commitments, 16 years of clean financial audits, maintaining emergency reserve funds, the district’s low amount of overall debt as well as the low costs associated with carrying that debt, the district’s continual ranking among the lowest spending districts in the state and the strong fiscal controls put in place by the district’s business office and the Board of Education.
“The district takes very seriously the need to balance our long term needs and goals with the financial impact on the community,” said Superintendent of Point Pleasant Borough Schools Vincent S. Smith. “Successes like the bond sale and the testament of faith from Standard & Poor’s validate the hard work of Mr. Corso, our Board of Education and our Administration.”