Bond Refinance Results in Nearly $600,000 in Savings for District 205 Taxpayers

Elmhurst Unit District 205 pulled the trigger on a bond refinance last week, which will result in a savings to taxpayers of about $582,000 in interest charges.

The district's total bond obligation is $54.15 million. The bonds were issued after residents in 2006 passed a referendum to approve facility upgrades and school additions. On May 1, the district refinanced about $7 million of that debt, reducing the interest rate on those bonds from 5.25 percent to less than 2.5 percent.

About $40 million of the existing 54.15 million debt was eligible for refinancing, according to Nora Joyce, vice president of William Blair & Co., the district's investment advisors. But refinancing $7 million is the prudent action to take at this time. Joyce laid out the rationale in a presentation to the School Board April 10.

"We can take a look next year and refund more," she said last month. "We will continue to watch interest rates and continue to refinance the debt as the market provides opportunities."

Joyce told the School Board that the minimum "present value" savings target for refinancing is 3 percent, and that refinancing the $7 million would result in a savings of more than 3 percent.

Trying to guess what the bond market is going to do is a gamble, she said.

"We've been tracking this opportunity since February," Joyce said, adding that back then, the savings would have been slightly higher based on interest rates at the time.

"There is no crystal ball," Joyce said. "If there was, I wouldn't know any of you people because I'd be on a beach somewhere. You can't predict volatility."

The refinancing reduces residents' tax bills and does not generate any money for the district.

“This represents thoughtful and careful oversight by the Board of Education on behalf of taxpayer dollars,” Superintendent Dave Pruneau said in a prepared statement last week.

School Board President Jim Collins praised the work of William Blair & Co. and District 205 Assistant Superintendent of Finance Chris Whelton. He also assured residents that the board will continue to seek out new ways to save money.

To read the Final Bond Pricing Report, click here.