The Newport-Mesa Unified School District has sold $76 million in municipal bonds, saving taxpayers an estimated $4.5 million by refinancing debt under voter-approved Measure A.
Paul Reed, the district's chief business official, told the seven-member school board Tuesday that he sold general obligation bonds on the open market.
"The sale moved forward. We sold $76 million in new bonds to buy out the old bonds," Reed told the board at its Tuesday meeting. "While we couldn't beat the interest rate that we got in 2003, which was 3.3%, we sold the bonds in groups and received a different set of interest rates for a different set of years — between 2% and 5%."
But Reed clarified to the school board that the savings will not go to the school district but instead straight into taxpayers' pockets.
"The money doesn't go to you," he said. "It stays in taxpayer wallets. The sale was an exercise in good government."
Measure A 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 upgrades included plumbing and electrical improvements, Internet connections, access for the disabled, new paint and, in some cases, major remodeling.
But the district still owes $95 million from the Measure A bonds issuance — a debt that's supposed to be refunded by 2028.
Reed said that the financial maneuver was akin to refinancing a home mortgage. Interest rates on the open market, he said, are low, a fact that has seen many governmental agencies either join the bonds business or refinance its debt payments. When Newport-Mesa floated its bonds, the state, Los Angeles International Airport and other public agencies did too.
This spring, Newport-Mesa is thinking about selling more bonds under Measure F, which voters approved in 2005, to fund the construction of a pair of new theatres and new middle school buildings at Corona del Mar and Costa Mesa high schools.
The district is capable of paying off the debt at low interest rates because it has such a good bond rating with Standard and Poor's.
In Newport-Mesa's case, its bond rating improved from AA- to AA.
"We're very pleased that our efforts to keep our books balanced, maintain reserves and not spend more than we had were recognized by the improvement in our bond rating," Reed said.