City to Save $2M from Bond Refinancing

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News Date: 
August 18, 2020

The City will save over $2 million from recent bond refinancing.  On August 12, 2020, the City locked in a price on refinancing $30.6 million in existing bonds.  The main highlights are as follows:

  • The City Will Save More Than $2 million – The municipal markets hit an all-time low last week and the City was positioned perfectly to take advantage of these conditions. As a result, the City will save more than $2 million and more than $170K in the current fiscal year alone. The total savings is approximately $575K more than what was estimated at the time of Council approval on August 4th. In addition, the City will no longer have to repeatedly renew the letter of credit in connection with its 2008 Variable Rate Bonds. Based on the City’s credit and favorable market conditions, the final cost total of borrowing is 1.55%.
  • The City Reaffirmed Its Strong Credit Rating – Despite all of the headwinds facing the City due to the impact of COVID-19, Standard & Poor’s affirmed the issuer credit rating of “AA-“ and rated these bonds “A+”. This result was largely based on the fiscally prudent policies put in place by the City Council and Staff as well as the rapid response to COVID-19 in the budget process.
  • The City Will Unencumber over $23 million in Leased Assets – The City’s existing leases had too much collateral pledged to those bonds. This refinancing cleans all of that up and unencumbers several facilities including the Alisal Office Building, Public Safety Building at 220 Lincoln and Fire Station No. 3.