Peru school board decided Wednesday to expedite refinancing its Parkside School bonds when interest rates dip low enough to save the city of Peru at least $500,000 in payments over the remaining life of the bonds.
The school board’s resolution would save the city money because the city agreed to pay for the bonds using a half-cent retail sales tax, not property taxes. The public supported the new school in a referendum with the knowledge that property taxes would not be used to pay for it.
The resolution allows board President Jim Renk and Bernardi Securities Inc., the school district’s bond manager, to promptly refinance the bonds without needing a board meeting and a vote, which could delay taking advantage of the market’s optimum swing, should that happen.
The $20 million in bonds were issued in two parts, 2008 and 2009. The trigger point, or savings floor, would reduce by $350,000 the future payments on the 2008 bonds and $150,000 on the 2009 bonds, said John Vezzetti, assistant vice president of Bernardi, who attended Wednesday’s meeting to explain the details. The bonds financed building the new Parkside School, which opened in 2009,
The plan will be in effect for two years starting in September, Vezzetti said.
As evidenced by Eric Heagy’s treasurer’s report earlier in Wednesday’s meeting and Vezzetti’s observations, interest rates have started to climb. But should they fall again, the district will be prepared to refinance, Vezzetti said.
Jeff Dankert can be reached at (815) 220-6977 or email@example.com.