Mars seeks savings by refinancing

‘Significant drop in rates’ cited

April 10, 2019 Cranberry Local News


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ADAMS TWP — Citing a chance to take advantage of favorable market conditions, the Mars School Board voted April 2 to refinance two bonds.

During a regular meeting, the board heard from Tim Frenz of Janney Montgomery Scott and Anthony Ditka of Dinsmore & Shohl about the refinance options. According to Frenz, a “significant drop in rates” meant that refinancing the district’s 2012 and 2014 A bonds would bring about $700,000 to the district.

The board was presented with options to either take the savings from the refinance over time or up front in cash at closing. According to Ditka, the district would only be permitted to take the cash to be used for capital improvement projects. Ditka said the district would still have about $14 million left in borrowing capacity, and reaffirmed the refinance wouldn’t be on the table unless the savings were impactful.

According to Dayle Ferguson, board president, the district has a facility upgrade list of projects that need to be completed sooner than later. Those include the replacement of the chiller system at the high school, a new roof for the primary center and casework at the middle school. That work is not part of the ongoing renovation of the building.

Those projects would cost a little more than $698,000, and Ferguson said they are urgent.

“If these are things we’re going to do anyway, with the shadow of the bids for middle school being out there — and we’re all hoping that they’re favorable and they’re going to come in within our range — do we want to take the cash up front to ensure that we’re able to get to these things now, or do we want to take the savings?” she asked the board.

Jill Swaney, district business manager, said taking the cash up front would create a cushion for projects that need to be completed.

“It makes sense that we would use these monies for these capital projects,” she said.

Board members agreed and voted unanimously to refinance the 2012 and 2014 A bonds. Members William Pettigrew and Christine Valenta were not in attendance.

The board also authorized an amendment of the basis swap attached to the 2012 bonds for transfer to the 2019 bonds. This allowed for variable interest rates based on different money market reference rates.

Ditka said the district must have the transaction reviewed by a third-party financial adviser who analyzes the transaction and sets out an interest rate management plan. He said the risks remain the same as they have for similar transactions in the past.

The board also met in executive session before and after the meeting to discuss personnel, legal and student matters.

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