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Health & Fitness

District TAN Sale Produces Interest Savings

Exceptionally low interest rates will allow the Huntington School District to realize big savings in the sale of $22 million in tax anticipation notes. The sale will close next Monday.

The low bidder for the entire issue was JP Morgan Securities LLC with a net interest rate of .173171 percent. Jefferies LLC, TD Securities, Morgan Stanley & Co. LLC, Janney Montgomery Scott LLC and Oppenheimer & Co. Inc. also submitted bids. The district retained New York Municipal Advisors Corp. as its fiscal advisor to oversee the process.

The district issues so-called TANs annually to fund operations while it waits to receive property tax revenues from the town. This year’s TAN sale will result in net interest expenses of $26,033.33, according to Sam Gergis, the district’s assistant superintendent for business. 

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“Unfortunately the structure of the tax collection schedule places us and the majority of school districts in a position to sell the notes annually,” Superintendent James W. Polansky said. “Nonetheless, the reduced amount sold and the exceptionally low interest rate this year speaks directly to the relative financial strength of the Huntington School District even during these challenging economic times.”

The district will realize a significant savings in the amount it had budgeted for the TAN interest. A higher figure was used during the budget development process last spring because district officials were concerned that a rise in inflation and interest rates could lead to serious fiscal consequences if sufficient funds weren’t allotted.

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“Last year the district issued TANs in the amount of $27 million,” Mr. Gergis said. “The lowest bidder was Morgan Stanley. At the time, the winning bid carried a rate of .224640 percent with a net interest cost of $43,297.50. Favorable credit and interest rates, as well as factors results from the government shutdown, led to a $17,264.17 reduction in interest costs from last year.”

Mr. Polansky said the savings generated from the TAN sale will be used to hold down next year’s tax rate.

 

 

 

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