CLEARFIELD – The Clearfield County Career and Technology Center’s Joint Operating Committee adopted an amending resolution Monday night so that it could broaden its scope in hopes of seeing some savings by refinancing two renovation bond issues.
The committee voted to approve a parameters resolution to refinance the two bonds in October 2010. The net present value savings was set at no less than 2.5 percent of the par value. The bonds were in the amounts of approximately $8 million and $1.4 million from 2005 and 2006.
“But a lot has changed since then,” said Leslie L. Bear, managing director of public finance of Robert W. Baird & Co. “. . . Borrowing rates hit 40-year lows in October; it was phenomenal. We didn’t know until a month later, when they were higher and continued upward.”
If the market would have been tested Nov. 1, 2010, the CCCTC could have saved approximately $81,600 the first year and approximately $132,500 in the second year. The school would have realized a savings of 3 percent, Bear said.
Because of the prerequisite legal paperwork required beforehand, there wasn’t sufficient time for the bond refinancing to be initiated at that time. Further, if a transaction had been initiated April 1, there wouldn’t have been any savings.
“It’s simply not there,” Bear said. In a “crystal ball” scenario Sept. 15, 2012, the school could possibly see a savings of $156,500 in the first year and “small pluses” after.
“It would be a savings of 2.6 percent, which is just above your target. But that’s if everything goes perfect. Right now, let’s just get ready and have the paperwork done. It could be two months, or it could be two years.
Lois Richards, executive director of the CCCTC, said they were currently looking at using the Clearfield County Industrial Development Authority (CCIDA) to issue the bonds as well as local banks to service their refinancing. She would like to see all the monies come back to Clearfield County.
When asked by committee chairman Rodney Kitko of the Moshannon Valley School District, Joseph K. Pierce, attorney at law with Eckert Seamans, of Harrisburg, said there would be an additional fee for amending the process. However, it’s only charged by his firm and that of Bear’s if a transaction occurs.
“If (the market) doesn’t hit 2.5 percent, it’s a no go,” he said. In October, the committee moved forward by approving a “very specific” parameters resolution with the Pennsylvania School Building Authority (PSBA) as the original issuing agency.
Under the amended resolution, the refunding may be issued by either the PSBA, or by an authority duly incorporated by Pennsylvania government unit under laws of the Commonwealth, which may include the CCIDA or the Clearfield County Municipal Authority.
If the PSBA is used, it would require non-bank-qualified tax-exempt interest rates. The use of another authority issuing less than $10 million per calendar year would allow for bank-qualified tax-exempt interest rates, Bear said.
Pierce said the amending resolution is “very broad” and “leaves options open as to the possibilities.” Kitko then asked if the school’s solicitor was in agreement with the proposed changes to which Pierce and Richards both said yes.
Richards indicated that the solicitor played an active role in discussions by phone and e-mail. She told the committee she would contact him and verify that he in fact agreed.
“We’re just getting ready. We missed out the last time because we didn’t have it all done. If the market presents itself again, at least this time, we’ll be ready and it’ll be done,” she said.