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Taxpayers might get a Valentine from CKSD
"If all the planets align and market conditions are right, Central Kitsap School District officials might be able to refinance bonds issued in 1994 and 1995, saving taxpayers more than $1.2 million over 10 years.It's the slowing economy that lowers the (long term) interest rates, said Richard Ehlers, vice president of the Seattle-Northwest Securities Corporation, which manages the district's bonds. It's inflationary fears that drive these rates - as the economy slows, the fear of inflation declines.Ehlers attended the Feb. 14 Central Kitsap School Board meeting and advised members that market conditions are favorable enough for them to consider refinancing the 20-year bonds. Members took his advice to heart and approved a motion to refund the bonds when the present value savings for taxpayers equal 4 percent. The board also passed a resolution allowing the district to participate in the state's bond guarantee program, giving it a better bond rating and investors better assurance. For a 4 percent savings to be achieved, long-term interest rates must drop by one-quarter of a point.Right now that is how the trend is going and there may be an opportunity (to refinance) in the next month, said Gary Powell, assistant superintendent for business and operations for the Central Kitsap School District. We want to be in a position to do it.The process is akin to refinancing a home mortgage at a lower interest rate, according to Ehlers. But the money saved would not go back into school coffers - it would be passed on to anyone who owns property and pays taxes in the district. Savings will equal about $100,000 per year until 2011.It's still $1 million that will stay in the county rather than going to the guys who finance the bond, Ehlers said.The U.S. Treasury only allows one advance refund during the life of a bond.When you expend your opportunity you want to make it worthwhile, Ehlers said. "