BHUSD OKs Provisional Plan to Refinance Measure K Bonds

The Beverly Hills Unified School District Board of Education voted Tuesday to issue up to $50 million in 2012 general obligation bonds to refinance existing bonds as long as the savings to taxpayers totals at least $2 million.

The board late last month on the proposal amidst concerns about which investment bank would underwrite and sell the bonds.

BHUSD’s bond consultant, Keygent Advisors, had recommended that the district take advantage of low interest rates to pay off some outstanding bonds issued as part of Measure K, a $90 million bond passed by voters in 2002. At the time, Keygent said the refinance would save city taxpayers about $2.5 million.

However, a moderate raise in interest rates since the meeting has reduced the estimated savings from the refinance by a few hundred thousand dollars. An exact determination of the savings won’t be known until the interest rate is locked in. The board voted 4-1 to conduct the refinance as long as the savings totals $2 million. Vice President Jake Manaster voted against the amended proposal.

After viewing information on the seven bids received to underwrite the bonds, the board also agreed with Keygent’s recommendation to hire JP Morgan Chase as the underwriter. Only JP Morgan Chase’s bid was discussed at the last meeting, prompting the board to hold off on making a decision.

“JP Morgan is a global firm with significant municipal bond distribution capability,” Keygent said in its recommendation, which is posted on the board’s website. “Their 20,000 retail professionals outsize all the other firms that responded to the RFP [request for proposal].”

JP Morgan also submitted a “very aggressive” underwriting fee of 0.263 percent, according to Keygent. While this was not the lowest fee submitted, Keygent still recommended JP Morgan because of its relatively low fee combined with “the vastly larger distribution network that JP Morgan brings to the table.”

Under the plan, BHUSD will refinance about $41 million in Measure K bonds issued in 2005. The district would issue new bonds at a lower interest rate, reducing the bonds’ total debt load from $71 million to $69 million or less, saving taxpayers at least $2 million.

The refinance had been vetted by the district’s , a five-member panel that advises the district on financial matters.

“This was an easy vote for me as it is a win-win for the community,” board President Brian Goldberg said. “I am pleased that the Finance Committee continues to work with staff to find ways to save the district money.”

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