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Bond refinancing up for school board vote

The deal could save Newport-Mesa taxpayers $3 million, district official says.

October 25, 2010|By Tom Ragan, tom.ragan@latimes.com

The Newport-Mesa Unified School District Board of Education will vote Tuesday on whether to refinance voter-approved bond debt, a deal that could save taxpayers $3 million.

Measure A bond debt was approved by voters in June 2000 to help make $110 million in repairs to schools that were more than 25 years old.

Some of the repairs included plumbing and electrical upgrades, Internet connections, disabled access, painting and remodeling.

But the district is still paying off the bonds and owes $95 million, a debt that's supposed to be refunded by 2028.

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In order to save taxpayers $3 million, Paul Reed, the district's chief business official, said in a written agenda item that the "economic climate is such" that taxpayers will benefit by a refinancing.

"Somewhat like another form, and perhaps better known type of debt, home mortgages, bonds can be refinanced when the economic climate is such that the taxpayers will benefit by a savings over time," Reed wrote. "In the instance of Newport-Mesa's Measure A bonds, the form of the refinancing is actually a new series of bonds and the process is called a 'refunding.'"

According to the agenda item, which is a resolution scheduled for possible discussion and action, the district would borrow the needed sum of money in the public finance market sufficient to pay off the holders of the old bonds.

Because the new bonds are issued at a time when competitive rates are lower, the overall cost of paying off the bonds is less, resulting in a savings to the taxpayers.

"Given the current low rates for bonded indebtedness," Reed writes, "it is estimated that the savings to the taxpayers of Newport-Mesa will be approximately $3 million over the remaining 18 year life of the original Measure A bonds, after which the entire Measure A debt will be paid off."

The refinancing will have no impact on the district's general fund or the operating position of the school district, Reed wrote.

The meeting begins at 7 p.m. at the district office at Baker and Bear streets.

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