[NSD] – The Newhall School District sold $36 million worth of notes Thursday from the second issuance of bonds made possible by November’s 2011 Measure E general obligation bond authorization.
The governing board took the necessary actions at its Nov. 5 meeting to authorize the sale of short-term Bond Anticipation Notes (BANs), and when offered to investors early Thursday, they sold quickly to four institutional investors.
In order to sell the notes the school district sought a credit rating from Standard and Poor’s Rating Services. The agency rated the district highly, awarding a SP-1+, the highest possible rating for short term borrowing. At the same time the agency reaffirmed the district’s AA- credit rating for longer term notes – notable given the last five difficult budget years in California.
A credit rating is the current opinion of the creditworthiness of the district with respect to a specific financial obligation. According to S&P, the rating is based on Newhall School District’s “Very strong available fund balance,” and “Good recent financial performance in light of a difficult funding environment, supported by what we view as good management practices.” The deep and diverse economic base in Los Angeles County and “robust wealth and income indicators” in the Santa Clarita Valley bolster the opinion.
Ratings are important to taxpayers living in the district’s boundaries – the better the rating, the more eager buyers are to purchase the notes, allowing for lower interest payments to the investors, in turn saving individual taxpayers thousands of tax dollars over time. The Newhall notes were sold at a market-low 2.05%.
“I am very pleased with S&P’s rating, the market’s interest in the notes, and the rapid sale. These factors reflect a great community economic base, a sound and well managed school district, and the low debt obligation of taxpayers in the Newhall School District,” said Phil Ellis, president of the district’s Governing Board.
BANs are used to generate funding for immediate use. They will be paid off after a short period by the sale of General Obligation Bonds. BANs are used to keep the promise made to voters during the 2011 election that their tax rate will not exceed a stated amount. Once a former school bond debt is paid, the next set of bonds is sold and the promised tax rate is maintained.
The $36,000,000 yielded by this sale will allow the Newhall School District to move forward on several fronts, as promised to the voters in November 2011. Projects to replace old portable buildings with permanent construction are underway at Valencia Valley and Meadows Schools and an old student bathroom building is being replaced at Stevenson Ranch School. Planning is underway for renovating the Newhall School auditorium, creating a 550 seat children’s theatre for use by the school district and community. Planning for the replacement of old portable buildings at Peachland and Old Orchard Schools is also underway. Technology improvements and device purchases throughout the district were supported by the first issuance of bonds. This issuance will assure funding for technology through the next five years.
“This is an exciting period because we’ve got a lot of construction plans moving forward,” said Ronna Wolcott, assistant superintendent for business services. “We need a large infusion of cash to execute construction contracts and continue our planning efforts. There will be a lot of activity in the district in the next three years.”