By Ashley McCarty
ACOVSD School Treasurer Brian Switzer has achieved $308,545 in taxpayer savings after refinancing the elementary school debt.
This comes two months after Switzer approached the ACOVSD Board of Education with the desire to refinance the remaining $6,805,000 of debt.
In the Jan. 25 meeting, Switzer explained that just as interest rates change and refinancing could be performed on a home mortgage to save money, the same possibility now existed for the school.
“It’s always good will to the public if you can save them money. I had just got done refinancing my own home, and I had seen the savings that I had gotten myself. I saw the same opportunity for the local taxpayers,” said Switzer.
In November of 2007, the levy was passed by Adams County voters to approve the construction of the three new elementary school buildings. The original debt, at $21,221,700 cost the taxpayers roughly $1,179,500 a year.
The debt is paid every six months, with interest paid in June, and principal and interest paid in December.
By state law, if a governmental entity attempts to refinance debt, they must hire an advisor and placement agent to assist in the endeavor. On February 17, a total of 31 banks who buy debt responded with interest in buying the $6,805,000 in outstanding debt.
The lowest and best bid came from Truist Bank, formerly known as BB and T Bank. They offered to loan the district the funds needed to refinance the $6,805,000 outstanding debt at an interest rate of 1.22 percent.
“I’m waiting on the calculations, but the payment will go down, because that was money saved on the interest. The principal will still say the same. This was dropping the interest rate from roughly 5.1 percent to 1.2 percent. We’ll meet with Adams County Auditor David Gifford, and he’ll be able to adjust everybody’s tax bills. So, we won’t need as much money now to pay off that debt,” said Switzer.
According to Switzer, this first phase of debt will be paid off by December of 2028.
“When they built the buildings, they issued the debt in two phases. So, we were able to refinance the part of the debt due to be paid off in December of 2028. “Second phase comes off in December of 2033. We didn’t refinance that part, because that part was issued at a lower interest rate. What they did, they issued so much debt to start construction, and then about mid-way through construction interest rates fell, and that’s when the bank issued the money to pay for the second part,” said Switzer.
The second phase of debt will be paid by December 2033, in which all debt of the district will be paid off.
“The public has been very generous in providing tax money to keep those buildings maintained, because those are taxpayer investments. The longer you can keep them maintained and repaired, you don’t need to ask for new buildings. They should last 50 or 60 years,” said Switzer.
