HERMITAGE School board looks to refinance loan

Fluctuations in the investment market are delaying efforts to refinance at a lower interest rate.
By HAROLD GWIN
VINDICATOR SHARON BUREAU
HERMITAGE, Pa. -- The Hermitage School Board wants to refinance some of the loans it borrowed to pay for the $24 million Hickory High School renovation/expansion project.
Fluctuations in the investment market, however, are making it an unwise move at the moment.
The goal is to refinance some old loans at a lower interest rate, thereby saving the taxpayers some money.
The school board voted nearly a year ago to have Mellon Financial Markets, LLC of Pittsburgh refinance $8 million remaining on a 1997 loan.
The market interest rates have never been good enough to provide the kind of interest savings the board wants, however, said Michael R. Zubasic, first vice president for Mellon.
That didn't stop the board Monday from authorizing Mellon to also look at a combined refinancing of a $2.5 million loan from 1998 and $5 million loan in 2001.
Being prepared
Zubasic said the market isn't right for that refinancing either right now, but the authorization to get the refinancing ready to go in the event the market improves is a step in the right direction.
He advised the board to set some minimum threshold of interest savings that would trigger the refinancing. Mellon Financial then wouldn't complete the transaction until securing final school board authorization, he said.
School Director James Lumpp suggested the minimum interest savings threshold be set at $125,000 for the refinancing of the 1997 loan and $125,000 more for the refinancing of the combined 1998 and 2001 loans.
The combined total would be worth more than one mill of property tax in the district, which generates $217,000 a year.
Zubasic said the interest savings would be paid to the school district in cash at the time of refinancing.
gwin@vindy.com