WASHINGTON — The Bellefontaine City School District in Ohio disclosed that it intends to redeem some or all of the $14.19 million of Build America Bonds it issued in 2010 because of reduced subsidy payments due to sequestration.
The timing of a partial or complete redemption has not yet been finalized, the issuer said in an event notice filed with the Municipal Securities Rulemaking Board's EMMA System on Thursday.
Another Ohio issuer, the Berea City School District, also recently disclosed that it can redeem its BABs, though it hasn't yet decided if it will do so.
The BAB program allowed state and local governments in 2009 and 2010 to issue taxable bonds and receive subsidy payments from the Treasury equal to 35% of the interest costs. The payments to issuers were reduced by 8.7% for part of fiscal 2013 and are being reduced by 7.2% in fiscal 2014, which began on Oct. 1, because of spending cuts known as sequestration.
The Bellefontaine school district has been receiving reduced subsidy payments starting with the payment that was due on June 1, 2013, the event notice said. The reduced payments triggered the extraordinary optional redemption provision for the bonds, which allows the bonds to be redeemed at a price equal to 100% of the principal amount being redeemed, plus accrued interest to the redemption date.
Last May, the school district issued a notice that it planned to exercise its right of extraordinary optional redemption and redeem $9.81 million of the BABs in June 2013. However, that notice was later rescinded.
The Bellefontaine school district is located in west central Ohio, 60 miles northwest of Columbus. The proceeds of the BABs were used to retire notes issued in 2009 for the purpose of constructing school facilities and locally funded initiatives under the Classroom Facilities Assistance Program of the Ohio School Facilities Commission, according to the official statement.
Stifel, Nicolaus & Co. was underwriter and Bricker & Eckler LLP served as bond counsel.
