Clinton Township, Macomb Township
Chippewa refinances debt
March 27, 2013
CLINTON TOWNSHIP — Chippewa Valley Schools announced the successful refinancing of $133 million of its debt days ahead of when a new law goes into effect that will increase district’s property taxes.
The refinancing will save the district $37 million over the next 20 years and will likely limit the debt millage increase for district residents, according to a press release.
Chippewa is currently in debt $514 million. Of that debt, the district owes $143 million to the School Bond Loan Fund, a state program that loans districts money for capital improvement projects. Previously, the only requirement for school districts to borrow from the fund was that it levied at least 7 mills from its residents to pay the state back. Chippewa, which assesses 7.65 mills for debt, has been borrowing from the fund since 1967. In December, Gov. Rick Snyder signed into law a bill that created a mandatory repayment date. And if that repayment date could not be met, the new law requires districts to raise property taxes until the payment date was met.
Chippewa is required to pay the $143 million by 2040, but is currently projected to not do so until 2058, according to the House Fiscal Agency.
Scott Sederlund, the district’s assistant superintendent for business and operations, said it is not clear yet how much the refinancing will save taxpayers, who will pay the first property tax increase in the summer of 2014.
“We’re still working on those numbers,” he said. “It’s a work in progress.”
He said the district sent the Michigan Department of Treasury information on the refinancing but had not yet heard back on how it will affect the millage increase as of press time.
“So we’ll have some final calculations moving forward,” Sederlund said. “It will take some time to digest all of this.”
Superintendent Ronald Roberts was grateful the district was able to take advantage of low interest rates.
“It’s nice to be able to take advantage of continued very low interest rates and save our taxpayers some money,” Roberts said in a statement. “The savings will be passed on to the benefit of the district’s taxpayers in the years ahead through reduced property tax payments.”
Chippewa sold the bonds at an average interest rate of 3.15 percent, which will replace bonds with an average interest rate of 4.85 percent, the press release said. The district originally issued the bonds in 2003 and 2005 to finance new capital improvement projects.
Fifth Third Securities in syndicate with J.P. Morgan, Stifel Nicolaus and Comerica Securities purchased the new bonds, according to the press release.
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