The Olentangy Local School District has completed the sale of a $48.9 million bond issue and is the first Ohio School district to utilize provisions of the American Recovery and Reinvestment Act of 2009 to issue Build America Bonds (BABs). By issuing the BABs, the district will pay a 4.03% interest rate compared to a 4.84% traditional tax-exempt rate available. Over the life of the bonds, which have a maturity of twenty-eight years, the district is positioned to save approximately $3.5 million in today’s dollars.
$34.5 million of the proceeds from the offering will be used for capital improvement projects, such as constructing and furnishing Cheshire Elementary School (CES), scheduled to open for the 2010-11 school year, and Olentangy Berkshire Middle School (OBMS), scheduled to open for the 2011-12 school year. Other improvements include energy-efficient upgrades for several of the existing schools, as well as the purchase of additional school buses, new textbooks and technology needs.
“Olentangy’s mission is ‘to facilitate maximum learning for every student’ and we are dedicated to doing this in a cost-efficient manner,” said Superintendent Wade Lucas, Ed.D. “By using this financing package, we are able to make our mission a reality while also honoring our commitment to local taxpayers of responsible fiscal management.”
“The stimulus plan has allowed Olentangy to continue to keep our promise of issuing no more than .82 mills as part of the March 2008 ballot issue, keeping our total bond millage at 8.72. This pledge is very important to the Olentangy Local Schools Board of Education,” said Treasurer Rebecca Jenkins.
According to two leading rating agencies, Standard and Poor’s and Moody’s Investor Services, the District received an AA+ and Aa2 credit rating, respectively. The district’s strong rating and good fiscal management contributed to the success of the offering.
Under the American Recovery and Reinvestment Act of 2009, states and local governments are eligible to issue BABs, through 2010, for capital projects. When issuing BABs the issuer typically receives a subsidy from the federal government equal to 35% of the interest. In many cases, this subsidy results in lower borrowing costs to the issuer, thereby reducing its overall borrowing costs.