LAUREL, WA: On February 25, 2020, Meridian School District sold a total of $3,955,000 of tax-exempt bonds, which will refinance $4,085,000 of its 2010 unlimited tax general obligation bonds to take advantage of lower market interest rates. The refinancing will save the District’s taxpayers more than $316,800 over the next 5 years. These savings flow directly to taxpayers through reduced tax levies and are not available for District expenses.
D.A. Davidson & Co. in Seattle is serving as bond underwriter for the refunding bond issue. The District has been monitoring bond market conditions over the past 10 months, and recent low interest rates allowed the District to exceed their savings target. Interest rates averaged 1.2% on the new bonds compared to 4.8% on the old debt.
Daniel Yorton, Director of Business & Finance for the District, said, “We are pleased to lock in low market interest rates and to deliver savings to our taxpayers with the refunding. Our goal is to be good stewards of the District’s facilities while maintaining a level, stable local tax rate.”
Moody’s Investors Service (“Moody’s) assigned its ‘A1’ credit rating to the bonds. The rating agency cited the following positive credit factors supporting the rating:
- consistently balanced budgetary performance;
- supportive voters;
- a growing tax base;
- growing enrollment; and
- strong management practices that keep operations balanced and debt low.
The Bonds also carry an enhanced rating of “Aaa” from Moody’s, the highest rating possible, because the bonds were sold using the State School District Credit Enhancement Program. The high enhanced and underlying bond ratings on the District’s bonds can be credited with attracting investor interest in purchasing the bonds, contributing to the debt service savings to taxpayers.
The 2020 refunding bond issue is the 2nd such refunding the District has completed in the past 5 years. The combined gross savings to taxpayers from these refunding bond issues exceeds $1.26 million.