Cartersville Schools Refinance Bonds, Plan to Become Debt Free

met Thursday afternoon during a special called meeting to discuss and sign a resolution that – with the – will give it a solution to becoming “debt-free” by reducing the current debt the system has in bonds.

Superintendant Howard Hinesley said currently the school system has three scheduled bonds to pay off. These include one bond extending back from 1992 for the middle school and two for renovations that were done in phases, stemming from 2001.

The board plans on paying off the middle school bond as scheduled by December of this year. The high school bonds are scheduled to be paid off by 2022.

However, the board has been looking into options on an earlier payoff for what it owes on the high school, said Hinesley.

“We had no option on redoing the middle school plan, but if we refinance the current payment plan on the high school, we’re going to be saving a lot of money and it’s going to get us out of debt,” added Hinesley.

With tonight’s approved joint resolution, the system adopted a Bond Purchasing Agreement and an Escrow Deposit Agreement to reduce the amount of interest on the high school bonds and bring the pay-off date up to 2015.

Under the current payment plan, the system would owe $8,610,000, however, with this new financial plan, Hinesley said that the school would be saving $500,000.

Hinesley compared the transaction to a mortgage on one’s home, and said that it would be similar “to refinancing that home and consolidating the loans.”

By redoing the bond agreement, Hinesley said that they have been watching the market for several months to receive the best deal.  

“When the stock market is good, the bond sales are not that good,” said Hinesley. “We had originally scheduled this months ago, but the stock market got better, which, of course, is a good thing, but the bond sales went down, so we held off.”

With the board’s plan, the joint resolution with the city council will allow for the school system to: pay off the existing debt on the middle school and use the amount in funds they were paying on that debt to go towards paying off the bonds for the high school. This would allow nearly $5 or $6 million and would not include the money that could be used from the Special Purpose Local Option Sales Tax returns, which have been above budget.

“We have been very fortunate to have to the support of the community through the SPLOST,” added Hinesley. “And because of that, we will have the SPLOST available to us again in 2012. What this allows us to do is allow us to pay off it as early as 2015.”

The school system will plan on seeing a new educational SPLOST again for years 2012-2017.

Hinesley said with the new plan and the new SPLOST, the system would have the flexibility of potentially being debt free by 2015, and then would be able to use the remaining educational SPLOST funds from the 2012-2017 SPLOST for other projects, for example, a new school.

 “We’ll have a windfall for 2 years,” said Hinesley.

The board voted unanimously to approve the resolution as did the city council. It plans to close on the deal by June 29.