Hockinson taxpayers are set to save nearly $1.4 million over the next 10 years, thanks to a refinancing plan approved by Hockinson School District. By locking in a lower interest rate on the 2015 school construction bonds, the district will reduce future tax collections and deliver savings to the Hockinson community.
The HSD Board of Directors approved a plan on June 10 to refinance the existing bond, which funded construction of Hockinson Middle School, to 3.40% compared to the original 4.92% interest rate. The school district was able to take advantage of a timely interest rate swing to lock in at a lower rate.
“We have been monitoring the market closely, hoping to have an opportunity to refinance these bonds. We are very happy to be able to lock these savings in for Hockinson taxpayers in a difficult market,” said Aaron Villanueva, the District’s Director of Business Services. “This was our earliest opportunity to refinance these bonds under IRS regulations.”
“This is a great opportunity to save our taxpayers a significant amount of money,” said Superintendent Steve Marshall. “This is money that will now stay in our community and local economy, rather than go to pay interest on bonds.”
Refinancing a bond is similar to refinancing a mortgage on a house: it allows the borrower (in this case, the school district) to replace the original loan with a new one at a lower interest rate, thereby lowering overall costs. This does not affect the timeframe for paying the bond; it is still scheduled to be paid off in 2035.
Hockinson School District is able to take advantage of lower interest rates because it has been assigned an A+ credit rating from S&P Global Ratings.
“This refinancing is one more way to demonstrate to our community our commitment to fiscal stewardship of the funds entrusted to us,” said Marshall.