Schools consider refinancing 2011 construction bond

KINGWOOD — Preston County Schools is considering refinancing the 2011 school construction bonds, which could free up cash for other uses.

The bonds will be paid off in 2026. The bond helped fund construction of new schools at Central Preston, South Preston and West Preston, and additions at Bruceton School and Terra Alta East Preston.

Rob Steptoe, of Crews & Associates Inc., a firm with offices in Morgantown that specializes in public bonds, addressed the BOE Monday.

The board agreed Steptoe can work with the county treasurer and bond attorneys on an inducement resolution, which it will consider at its next meeting.

Steptoe said in the current market, the bonds can be refinanced at a lower interest rate. Monongalia, Hancock and Berkeley counties recently did so, working with the company, he noted.

“Interest rates now are approximately 7% lower,” than when the bond passed, Steptoe said. Even with refinancing costs, the transaction will be beneficial if more than 3% is saved, Steptoe said.

Refinancing would create cash flow savings over the next six years, he said. “I believe that translates annually into about $433,000 interest costs each year,” or about $2.6 million over the next six years, Steptoe noted. That money would be freed for operations.

Superintendent Steve Wotring said he spoke with Bowles Rice, attorneys for the board on the bond, and “they felt strongly this is the direction we need to go.”

Preston has a “good bit of surplus” being held by the West Virginia Municipal Bond Commission, said Steptoe. “Once you refinance, you can use that surplus to borrow less [for the refinancing], but you can also use some of that surplus if you have projects that are tied to the original bond,” Steptoe said.

Steptoe said the money is “potentially available for projects or to put forth in lower borrowing,” or some of both. Brick and mortar type projects tied to the schools worked on with the 2011 bond could potentially be done.

Board Member Bob Ridenour asked how the refinancing might affect taxpayers.

Steptoe said that once the Municipal Bond Commission sets the levies for the bonds, “it is a lower tax burden because you do not pay as much in debt service.” The board could choose to lower the levy rate to taxpayers or keep it the same, he said.

The sale of the new bonds couldn’t occur until next May, Steptoe said.

TWEET @DominionPostWV