South Middleton School Board Monday passed a resolution authorizing the refinancing of almost $10 million in 2014 bonds for a target savings of at least $100,000 in lower interest payments.
Financial consultants should know by April 20 whether the bond market would support the target goal and whether it would be wise for South Middleton to lock in lower rates in May, said Brad Remig, managing director of Public Financial Management Inc. of Harrisburg.
The plan is to delay as long as possible the payment of a fee to determine the district’s credit rating in case market conditions do not support a refinancing this spring, Remig said.
PFM has negotiated an agreement where South Middleton would pay 75 percent of the $15,000 fee upfront. If conditions prove unfavorable and the refinancing falls through, the 75 percent could be applied as a credit toward a future credit rating analysis out to six months, Remig said.
The resolution enables district administrators and financial consultants to process the paperwork to prepare the bonds for possible refinancing at a rate lower than the current 3.25 percent. The board would need to approve a separate follow-up motion to execute the refinancing of the bonds.
June 1 is the earliest the board could vote on the follow-up motion on bonds that become eligible for refinancing starting Sept. 1.