Bond savings more than $4 million
Scott De Laruelle
Unified Newspaper Group
After a “very competitive” bidding process for the $44.9 million in bonds to fund last year’s Oregon School District referendums, the district saved around $4.3 million in interest to allow it to “set the tax lower in future years,” superintendent Brian Busler said.
The Jan. 23 public sale received 50 bids, with several firms submitting multiple bids. According to OSD financial consultant PMA Financial Network, which handled the sale, the auction was extended 13 times in the final minutes, as new bidders kept topping each other with a lower rate. When the time expired, the $44.9 million in general obligation school and building bonds went to Raymond James with an offer of 3.33 percent interest, edging out Citigroup after the two went back and forth at the end.
That rate was better than what district officials had estimated before the Nov. 6 referendums, with interest costs reduced from around $25 million to around $20.5. The savings of $4,358,474 will reduce the amount of money the district will tax in future years, Busler said.
“It is difficult to say that it was more competitive than we anticipated, although 50 bids is a high number,” Busler wrote in an email to the Observer.
One of the reasons for the healthy competition between the two banks — and subsequent lower interest rate — was likely the bonds’ environmentally focused “green” designation, said OSD business manager Andy Weiland, who watched the bidding in real time with a mixture of excitement and analytics.
“Two banks would take turns reducing their interest rate in order to win our bonds (and) each time they did, it saved tens to sometimes hundreds of thousands of dollars in interest cost for our taxpayers,” he wrote the Observer in an email. “Those two banks in particular wanted those bonds, and my thinking is that the green designation meant something to their clients.
“These types of bonds are pretty rare in the market right now, but they are catching on.”
Email Unified Newspaper Group reporter Scott De Laruelle at firstname.lastname@example.org.