HERMITAGE SCHOOLS Board to refinance to save on renovations

The district will see a one-time $198,000 reduction in its debt payments.
HERMITAGE, Pa. -- The city school board is saving the district $297,202 by refinancing two loans it received to help finance the $24 million renovation and expansion of Hickory High School.
The board voted Thursday to refinance $2,065,000 remaining from a 1998 bond issue and $5,910,000 from a 2001 bond issue.
Michael R. Zubasic, first vice president for Mellon Financial Markets LLC of Pittsburgh, said the bond market interest rate has improved considerably over the past couple of weeks.
He had projected an interest savings of about $167,000 two weeks ago but came back to the board with revised figures showing a $297,000 savings over the life of the refinancing.
The old bonds carried interest rates ranging from 3.75 percent to 5.35 percent while the refinancing will carry rates ranging from just 1 percent to 4.35 percent, Zubasic said.
Payoff date
The bonds will be paid off in 2023, the same time frame for the original 2001 issue, he said.
Hermitage won't get any actual cash in the transaction but will realize the savings in the form of some lower annual debt service payments.
That will free up debt service money for other purposes the board deems appropriate, Zubasic said.
The refinancing is structured so that Hermitage will get a $198,000 payment break in fiscal 2003-04 and $44,000 reductions in each of the two following years. The final break of about $12,000 will come in the fourth year.
The board also learned that there is still $330,000 in the high school project account that wasn't used. The board passed a resolution that will allow that money to be used for improvements needed in other district buildings.