The Ann Arbor Board of Education has authorized administrators to move forward with a bond refinancing that will result in a slight savings to the average taxpayer.

The $123.4-million bond that voters approved in 2004 primarily served to fund the construction of Skyline High School. It also funded various remodeling and capital improvement projects at other buildings.

Superintendent Patricia Green said the current market is very favorable for refinancing; interest rates are low.

She described refinancing a bond as similar to refinancing a mortgage on your home. But in the district’s case, because the bonds are payable through a debt millage, the savings would be to taxpayers of the district, not the district’s general fund.

Refinancing now could save Ann Arbor Public Schools residents a collective $7.3 million in property taxes over the life of the bonds. The bonds will expire in 2029, said Nancy Hoover, director of financial operations for AAPS.

Deputy Superintendent for Operations Robert Allen said the district will need to move forward with the refinancing quickly, considering the market already has shifted since March 16, which is when administrators began drafting their initial refinancing recommendation. At that point, taxpayers were projected to see a savings of $8.7 million.

In just one week, the market changed, Allen said, reducing taxpayers’ savings by $1.4 million.

Although called a “refund,” taxpayers would not actually receive a check in the mail with money back. Instead, the mills being levied for the debt retirement would be reduced by 0.05 to 0.07 mills, Allen said. That equates to a savings of $5 to $7 per year for a family with a $100,000 home.

“Although it’s good to be reducing the millage, I would caution our (taxpayers) not to spend it all in one place,” Trustee Andy Thomas said sarcastically.

The district will refinance an amount not to exceed $119 million. Allen explained this is because since 2004, the district has paid down some its principal and it is estimated Ann Arbor has just under $119 million in principal remaining.

Other parameters included in the refinancing agreement approved Wednesday were: 1) the true interest cost of the bonds is not to exceed 3.5 percent; and 2) the net, present value savings from the refunding must be a least 5 percent of the principal amount of the bonds to be refunded.

The Board of Education approved nearly the exact same agreement in 2007. However, before the refinancing process could be completed, the market shifted and the savings to taxpayers shrunk. Thus, the district did not go through with the refinancing, Allen said.

Staff reporter Danielle Arndt covers K-12 education for AnnArbor.com. Follow her on Twitter @DanielleArndt or email her at daniellearndt@annarbor.com.