Pasadena Unified Says Bond Refinancing Will Save Local Taxpayers More Than $10 Million

The Pasadena Unified School District has successfully refinanced a portion of its outstanding general obligation bonds, saving local taxpayers over $10 million by reducing its long-term borrowing costs, the District told its community in an email Friday.

According to that announcement, the District issued General Obligation Refunding Bonds to refinance outstanding bonds approved by voters under Measure TT.

Net of all transaction costs, the District said, the refinancing will save taxpayers $10.4 million in total debt service — a net present value savings of $8.8 million, or 6.6% of the refinanced principal. The savings will be realized proportionally over the remaining 10-year repayment period, with final maturity in 2036, the announcement said.

“This refinancing reflects our commitment to being responsible stewards of taxpayer dollars,” Superintendent Elizabeth Blanco said in the announcement.

The refinancing does not extend the repayment term of the bonds, according to the District. Instead, the announcement said, it takes advantage of favorable market conditions to reduce borrowing costs, which the District compared to a homeowner refinancing a mortgage to obtain a lower interest rate.

The District said it has previously completed bond refinancings in 2014, 2016 and 2019, and that including the latest transaction it has reduced total debt service on its voter-approved bonds by more than $68 million since 2014.

“Good financial management doesn’t end once bonds are issued,” Chief Business Officer Arik Avanesyans said in the announcement. “Whenever market conditions provide an opportunity to lower the cost of voter-approved bonds, it is our responsibility to pursue those savings on behalf of our Community.”

General obligation bonds are approved by local voters and may be used only to construct, repair, modernize or improve school facilities, the District said. Bond proceeds cannot be used for teacher salaries or day-to-day operating expenses. The District said its bond program remains subject to independent citizens’ oversight, annual financial audits and public reporting.

The refinancing was completed with the assistance of municipal adviser Dale Scott & Co., according to the announcement, which said the firm has advised California school districts on municipal financings for more than three decades. Dale Scott & Company, a San Francisco-based municipal financial advisory firm, has served the Pasadena Unified School District since 2019.