New Haven School District approves lease refunding certificates of particpation with a net savings of about $101,356

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Submitted by: Michele Scheer, Board Secretary

At a regular meeting of the New Haven School District Board of Education on May 11, 2011, a refunding resolution was approved.  It authorized the sale of $365,000 Lease Refunding Certificates of Participation at an average interest rate of about 3.53%, compared to the Series 2006 Certificates which carry an average interest rate of about 4.630%.  By utilizing a portion of the remaining general obligation bond proceeds authorized by the voters on August 5, 2008 to prepay principal along with the refunding, the District reduces the future interest expense by about $101,356 and shortens the final repayment period by five full years from the Series 2006 Certificates.  Citizens Bank made an advance commitment to purchase all of the Certificates which was tremendously helpful. The Superintendent of Schools, Kyle Kruse, expressed enthusiasm and support for the refunding option selected by the Board of Education.  “In these economic times every dollar we save on interest benefits our overall educational program," Mr. Kruse remarked.

The Board President, Brenda Menke, pointed out that the $101,356 of interest savings for the Series 2011 refunding is not all the District may realize due to the Series 201 1 Refunding Certificates having a call feature in 2014 at no penalty. "If interest rates are lower in 2014 or later, we can take advantage of that. Meanwhile we are locking in these levels that are about one percent (1.00%) lower than they were in 2006," stated Mrs. Menke.  L. J. Hart & Company of St. Louis, Missouri prepared the refunding proposal and Gina C. Martin, Assistant Vice President, explained how it can fit into the long range plans of the District.  Ms. Martin mentioned that the three significant factors making the Series2011 refunding possible were the remaining bond proceeds set aside to prepay principal, the lower interest rates than in 2006, and the fact that the Series 2006 Certificates are subject to prepayment on June 12, 2011 at no penalty.  Ms. Martin complimented Mr. Kruse for his prompt and thorough preparations to supply the data necessary for the official statement, as well as the Board of Education for their foresight in making the Series 2006 Certificates callable in five years.

The Proceeds from the Series 2011Refunding Certificates will prepay the callable Series 2006 Certificates on June 12, 2011. The Series 201 1 Refunding Certificates were underwritten by L.J. Hart & Company and Ms. Martin mentioned that Citizens Bank purchased the entire lease financing, which was an important key to the success of the financing. The closing for the refunding issue is occurred on June 9, 2011. Several board members complimented Citizens Bank for its support as well as Mr. Kruse and L.J. Hart & Company for developing the attractive refunding plan. "It is nice to be able to save $101,356 of interest expense and shorten the debt by five years from the Series 2006 Lease,” commented Nadine Pruessner, Vice President of the Board of Education.