WWPS sells its 2014 refunding bonds

By: Maria Allard | Warren Weekly | Published May 14, 2014

WARREN — Warren Woods Public Schools will save nearly $900,000 over the next 11 years after school officials announced the sale of its $7.515 million 2014 Refunding Bonds.

The district sold its bonds in the capital market April 23, and the financing is scheduled to close May 21.

Through the refinancing efforts, WWPS has secured savings in excess of $899,000 over the next 11 years. The 2014 Refunding Bonds will refund portions of the 2005 Building & Site Bonds.

According to an email response from WWPS Superintendent Stacey Denewith-Fici, the 2014 Refunding Bonds are new bonds the district sold and used the proceeds — at a lower interest rate — to pay off higher interest rate bonds from 2005. The 2014 Refunding Bonds will replace the 2005 Building & Site Bonds at a lower rate.

The process was similar to refinancing a home at a lower interest rate. According to Denewith-Fici, the money will all go back to the taxpayers in the form of lowered tax levies.

“By refunding the bonds at a lower interest rate, we will be able to reduce the amount of taxes we levy on the residents of Warren Woods,” she stated in the email.

According to WWPS Business Manager Neil Cassabon, school officials don’t yet know what the millage rate will be reduced to. School officials are waiting to receive the updated property tax values from Macomb County to complete those calculations. Taxpayers will see the new rate when the City of Warren sends out the July tax bills.

The school district’s bonds were sold at a true interest cost of 2.12 percent. True interest cost factors in all the expenses related to the sale of the bonds when computing the overall cost of the financing, including issuance, underwriter’s discount, premium or discount, and the interest expense. 

The 2005 Building and Site Bonds is the same bond as the $47 million bond issue that passed in September of 2004. The bond issue paid for a number of building enhancements and renovations throughout the district.

When the 2004 bond passed, the bonds were sold in two series — the 2005 Building and Site Bonds — which the district is now refunding, and 2006 bonds, which are still being paid off and are not eligible to be refunded at this time, Denewith-Fici stated.

As part of the bond issuing process, Standard & Poor’s Rating Services (S&P) reviewed Warren Woods’ financial condition and affirmed the district’s “A+” credit rating with a stable outlook. According to school officials, the quality of the credit rating directly impacts the marketability of the bonds.

According to a WWPS press release, S&P applied their rating on the Michigan School Loan Qualification Program. According to Denewith-Fici, the program was established by the Michigan Constitution in 1963 and amended by Public Act 92 of 2005 to provide a state credit enhancement and loan mechanism for school district bond issues. The bonds must be qualified by the State Treasurer, and the bond proceeds must be used for capital expenditure purposes.