Under NJ rules, what is the minimum present value savings required for refunding bonds without Local Finance Board approval?

Under NJ rules, what is the minimum present value savings required for refunding bonds without Local Finance Board approval?

• A. 1 percent.
• B. 0 percent.
• C. 5 percent.
• D. 3 percent.

Answer: (D)

New Jersey allows a refunding to proceed without Local Finance Board approval only if the present value savings meet a minimum threshold. That threshold is 3% of the refunded par amount. The savings are found by comparing the net present value of the old debt service with the net present value of the new debt service, using the rate on the new issue (and including relevant issuance costs in the analysis). If the PV savings are at least 3%, you can bypass LFB approval; if not, LFB approval is still required. For example, refunding $1,000,000 would need at least $30,000 in PV savings.

New Jersey allows a refunding to proceed without Local Finance Board approval only if the present value savings meet a minimum threshold. That threshold is 3% of the refunded par amount. The savings are found by comparing the net present value of the old debt service with the net present value of the new debt service, using the rate on the new issue (and including relevant issuance costs in the analysis). If the PV savings are at least 3%, you can bypass LFB approval; if not, LFB approval is still required. For example, refunding $1,000,000 would need at least $30,000 in PV savings.