TIPP CITY — The Tipp City Board of Education unanimously approved a resolution accepting a bank proposal for refund bonds that could save taxpayers up to 0.15 mills annually.
The resolution came after a presentation given by Mike Burns, managing director for Baird. Burns has served Tipp City Schools as their underwriter and placement agent over the last several years, and has managed bond issues in the district before. In the past, he has helped the district work with the new school facility project and has been working with the district since 2014.
The bonds that Burns talked about refinancing started back in 2001, when Baird issued taxes and school construction bonds. These bonds were used to finance the new high school, as well as other existing improvements to existing facilities. Those bonds were advanced refunding and tax exempt; in 2005, the bonds were refinanced for savings. In 2015, Burns helped the district refinance those bonds again as a tax exempt current refunding, which saved the school district an estimated $734,00 in interest savings at the time.
“Because it was a bond issue, that $734,000 went back to the tax payers, so they all saw a millage reduction on their tax bill,” Burns said.
The terms for refinancing the 2015 bonds is still the same as previous bond refinancing, with the interest rate lowering. Burns echoed that none of the savings from the refinancing goes to the school district — it all goes back to the tax payer, in the form of a mills reduction.
Burns prepared a term sheet and sent it out to 63 local, regional and national banks and followed up with each one several times in order to get the district the lowest interest rate possible on the bond refinance. Of the 63 banks that received the term sheet, 10 sent back proposals, which Burns said is very common.
“A lot of banks pass because they don’t understand public finance, they don’t have an appetite for public finance — for various reasons, they pass. None of them passed because of anything bad about Tipp City,” Burns said.
Burns said that he felt Key Bank’s proposal of a 0.61% fixed interest rate over three years was best for the district and the tax payers, which would create approximately $197,000 worth of savings to taxpayers.
“Key has the best proposal because it’s the lowest interest rate, the highest savings, and the most flexibility with pre-payment,” Burns said.
The bank proposal will be accepted this week and Baird will move forward with closing procedures on the proposal. The savings, Burns said, will start to show up in 2022.
“It’s a great thing for tax payers, because you’re doing everything you can to keep the costs low,” Burns said.