LTUSD takes advantage of bond market and saves taxpayers $6M over next 10 years

SOUTH LAKE TAHOE, Calif. - A move on Wednesday as interest rates in the bond markets dropped saved South Lake Tahoe taxpayers over $6 million over the next ten years. Lake Tahoe Unified School District (LTUSD) refinanced some of its general obligation bonds to take advantage of low-interest rates in the municipal market and lock in savings for taxpayers.

LTUSD refinanced approximately $24 million of outstanding bonds and the financing will close on August 28, 2019.

The bonds were issued with a combined interest cost of approximately 1.3 percent, which was achieved due to demand for the LTUSD bonds and their strong credit rating (A1 from Moody’s Investor Services). On the day of sale, LTUSD received more orders from investors than bonds available and coupled with the falling rates allowed them to lock in very low borrowing costs for the bonds.

The savings for property owners comes through this refinancing.

In a school general obligation bond refunding, similar to refinancing a home to a lower interest rate mortgage, proceeds from the new bonds are used to retire the older bonds. With municipal bond rates near historic low rates, the District was able to refinance at an all-in cost of 1.3 percent compared to interest rates ranging from 4.25 to 5.4 percent on the original bonds issued in 2009. The lower interest rates reduce the debt service payments, which results in savings to taxpayers. The bonds were refinanced without extending the term of the prior bonds.