The Port Clinton City School District is pleased to announce that its recent bond refinancing efforts will save district taxpayers in excess of $1 million in future debt service costs.
In its original financing of the construction and renovation costs for Bataan Memorial, Port Clinton Middle School, and Port Clinton High School, the District utilized Build America Bonds (BABs). BABs were made available as part of the Recovery Act of 2009, and were intended to help lower borrowing costs on public capital projects. Congress and the Obama Administration encouraged public entities to use BABs to pursue needed capital projects, promising that the U.S. Treasury would pay a direct subsidy of 35% of the interest costs to the bond issuer.
The BABs program was, and remains, one of the many casualties of the 2013 budget battle in Washington. What became commonly termed as “sequestration” led to an initial 9% reduction in the promised governmental subsidy payment to the school district. With no relief to the sequestration impact expected, District Treasurer Jeff Dornbusch, Board Vice President Beth Benko, and several advisors worked to find a solution that might reduce the significant financial burden of continued subsidy reductions. Ultimately, the District exercised the early call provision on its BABs, leading to an early redemption of the BABs. In turn, the District is now financing approximately $24 million in debt with traditional tax exempt bonds that carry a lower total net cost in excess of $1 million. For taxpayers, that means the millage rate for the debt can be reduced each year. Thus, district taxpayers will save this 1 million dollars over the next 27 years.
“This is great news for our district and our taxpayers,” stated Mr. Dornbusch. “We were able to get out of the government subsidized program that became subject to sequestration and save even more money for our taxpayers.” Ms. Benko, who worked Mr. Dornbusch to facilitate the sale of the traditional bonds, added, “This collective effort demonstrates the commitment of the Board of Education, Superintendent, and Treasurer to remain vigilant stewards of the district’s financial health for the long term. We recognized that the government subsidy reduction would shift a financial burden to our district’s taxpayers where one was not originally envisioned, and worked to find a beneficial solution.”
So what does this all mean for local taxpayers? The result is local property owners will see a decrease in the Port Clinton City School District portion of their tax bill starting next year.