At its January 12 meeting, the MVLA board of directors approved a deal with Umpqua bank to refinance $3 million in debt, expected to save approximately $450,000. The debt was accumulated when the district purchased its Adult Education Building at 333 Moffett Boulevard and constructed buildings for Alta Vista High School in 2004.
“Whenever we have an opportunity to save taxpayers money, we want to take advantage of it,” assistant superintendent Mike Mathiesen said.
When interest rates are low, districts can refinance their debt, borrowing money at low interest rates and using it to pay off its higher-interest debt. In this case, the interest rate changed from 5.05% to 2.99%.
The district’s $14 million in reserves far exceeds its $3 million debt. However, the district can afford its existing payment schedule, and does not want to deplete its reserves.
“If you pay off the debt in one lump sum then we wouldn’t have that money available for other projects…or unforeseen scenarios,” Mathiesen said. “We have an existing debt payment schedule set up…and there are advantages to paying over time rather than in one lump sum.”
Aside from the interest rate, the other terms of the debt are largely the same, maintaining the same repayment time frame and allowing the district to pay back the debt ahead of schedule if revenue is high enough.
