It's not "Freefall," the next James Bond thriller opening Nov. 9, but it could be called "Windfall."
Because of refinancing at low interest rates this week, the Northampton Area School District stands to receive a windfall savings of $818,477.83.
The savings results from the reissuing of General Obligation Bonds, Series of 2012, approved Monday night by a 7-0 vote of the board, with two members absent.
The 2012 bonds, with an aggregate principal amount of $10 million, refunds General Obligation Bonds, Series of 2008.
A net savings of 2 percent, or about $280,000, was the target, according to Jamie Doyle, director, PFM, district financial consultant, when she proposed the refinancing earlier this year.
Instead, the more than $800,000 over the life of the bonds, represents a savings of 9.19 percent.
"That is just about five times the target savings that you set," Doyle said.
"When I heard that [the savings], I almost fell off of my chair," NASD Business Administrator Terry Leh said at the Oct. 22 meeting.
The refinancing occurred in an Internet auction held the morning of Oct. 22, with 57 bids from seven firms, according to Doyle.
The successful bidder was Janney-Montgomery-Scott, with a 1.64-percent interest rate.
"Interest rates continue to hover at all-time low rates," said Doyle. "We're not extending the debt. We're just refinancing it."
Settlement on the bond is expected Nov. 27. The call for the bond is Feb. 15, 2018.
Doyle recommended that the one-time savings be put toward capital use for the Northampton Area Middle School project.
Moody's bond credit rating of NASD is Aa3, known as Double A 3, which is one of the best ratings, Leh told The Press after Monday night's meeting.
Because of NASD's excellent credit rating, the district won't be charged bond insurance, a $43,000 savings.
The Monday morning bidding was active, Doyle said, with "the two-minute rule" called 11 times, meaning there was "leapfrogging" between at least two financial services firms, with Janney-Montgomery-Scott prevailing.
"There was a lot of action, a lot of interest, in your bond," Doyle told school board members and administratiors.
"PFM was very pleased with the bidding process. We would recommend you accept the Janney-Montgomery-Scott proposal," said Doyle.
Also Monday night, in a separate 7-0 vote, the school board approved the issuance of General Obligation Bonds, Series A of 2012, in the maximum aggregate principal amount of $7 million to fund a portion of the middle school project.
Doyle said the more likely amount is $5 million. The higher amount represents an increase in the event of higher interest rates, which isn't likely, Doyle said.
Maximum interest rate for the Series A Bonds is 6 percent but, Doyle said, "I don't expected it to be that high."
Attorney Kevin Reid of King, Spry, Herman, Freund & Faul, district financial legal consultant, briefed school board members about the bonds issuance.
"I'd like to thank Kevin [Reid] and Jamie [Doyle] for working with us so closely on this," Leh said. "We've been talking about it for months. It's good to see such favorable results."
School Board President David Gogel asked what the amount of the NASD debt principal is now. He was told by Doyle and Leh that it is approximately $77.3 million.
"We've come a long way in the 10 years that I've been on the board," Gogel said. When he joined the school board, Gogel said, NASD debt was $180 million to $190 million.
In other business at the Oct. 22 meeting, the school board voted 7-0 to:
· Accept approval of the Pennsylvania Department of Education for PlanCon Part D for the middle school project. Jay Clough of KCBA, middle school architects, said commonwealth approval makes NASD eligible for about $10.5 million in reimbursement for the approximate $80 million project.
· Accept approval of the Pennsylvania Department of Education for PlanCon Part E for the middle school project. "Part E is for the bidding on the project," Clough said.
NASD Superintendent Joseph Kovalchik announced that a public meeting to provide an update and more details about the project will be held Dec. 6, with time and location to be announced.
Additionally, Kovalchik said he's met and will continue to meet with NASD Athletic Director Todd Bowser and representatives of NASD booster clubs concerning the closing of the Al Erdosy Memorial Stadium for the 2013 and 2014 seasons.
Approximately 20 percent of the stadium field and track must be excavated for field house demolition and field house and school construction.
The closing of the field will impact Konkrete Kids' football games, cross country meets and marching band activities, as well as booster club concession stand income.
"It's [construction] going to impact many groups, including those not funded by the school district," said Kovalchik.