NASD windfall surpasses quarter-million dollars
It's been a long, cold winter for the Northampton Area Middle School construction and secondary campus renovation project.
With the recent arrival of spring comes a March windfall of savings that warmed the hearts of Northampton Area School District School Board members Monday night when they learned the project may yield a cool quarter of a million dollars in cold-cash savings.
An Internet auction to refinance district bonds has netted a $262,620.50 savings.
That's about $120,000 more than the $142,000 windfall estimated when the refinancing was approved in a school board vote last month.
"Overall, it was a very good day," school board President David Gogel said at the March 24 meeting.
Moreover, NASD Superintendent Joseph Kovalchik noted the 2.36 mills set aside for the $80.7-million middle school and secondary campus project has been reduced to 1.69 mills, down .07 of a mill from last month's figure.
"That's a significant difference for all of us – for the taxpayers," Kovalchik said.
Jamie Doyle, managing director for Public Financial Management, Inc., district consultants, said 26 bids were received from eight firms, with JP Morgan Chase & Co., the successful bidder at 3.85 percent.
In addition, Doyle said, because NASD has maintained its Moody's Aa3 rating, no bond insurance is required, resulting in an additional $46,350 in savings.
Doyle said Moody's cited NASD's moderate size desirable tax levy, above-average wealth and healthy financial reserves in its favorable credit rating.
According to Moody's web site, obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.
The windfall exceeds the minimum 2 percent refinancing savings target stated in Doyle's Feb. 10 board presentation.
NASD board members voted unanimously 9-0 at the Feb. 24 meeting to authorize a Parameters Resolution for the issuance of General Obligation Bonds Series B 2014 to refund the district's General Obligation Bonds Series 2006, 2007 and 2009.
The refinancing is yielding the windfall savings.
School board members also voted 9-0 at the Feb. 24 meeting to authorize the issuance of General Obligation Bonds, Series A 2014, in the amount of $29,250,000 to fund part of the middle school and secondary campus project.
Of the so-called "new money" Series A bonds, $2.2 million is being returned to the district. The return is because investors are paying the district more than 100 cents per $1 to offer 4 - 5 percent coupons, which is said to be higher than the going rate.
Of the $2.2 million, $1 million will be used to downsize the construction project debt, from $29,250,000 to $28,250,000.
The remaining $1.2 million will be deferred to the final 2016 project payment amount, reducing it from $10 million to $8,725,000.
"We continue to fine tune the plan and come in under budget," Doyle said in her March 24 Internet bond auction report to the school board and administrators.
"No action is required on the part of the board which is covered by the parameter resolution," Doyle said Monday night.
Settlement on the bonds issuance is scheduled April 29, when the next deposit for the project would be placed in district coffers.
The middle school construction and secondary campus renovation project includes the new Stadium Drive, field house, parking lots, school bus drop off area and track and field at Al Erdosy Memorial Stadium.
The three-story, 272,000-square-foot middle school for 1,500 sixth-, seventh- and eighth-grade students opens in fall 2015. It includes a new gymnasium, library, cafeteria and swimming pool.
NASD Director of Operations Robert J. Yanders reported Monday night that the middle school second story is in place.
The masonry crew increased from 22 to 30 this week, Yanders noted.
"We're constantly meeting concerning the construction," Kovalchik said.
A four-hour meeting was held Monday to discuss middle school furniture purchases.
"We're trying to get some quality furniture without breaking the bank," Kovalchik said.