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Measure R bond sale returns $21M with lower-than-expected interest rate; district projects lower tax levy
Summary
District and its underwriter reported successful Measure R bond sales with a winning bid that lowered projected taxpayer levies from about $60 to roughly $53 per $100,000 assessed value; funds were received and are earmarked for facilities projects.
District finance staff and the bond underwriter presented results of the Measure R bond sale held May 21. The district issued approximately $21 million of Measure R bonds and received the proceeds on June 5. Underwriters opened the sale to competitive bids; Fidelity submitted the winning bid with an average interest proposal of 4.57%, below the district's budgeted 5.23%.
Keith Weaver of Government Financial Services (the district's JPA advisor) told trustees the result reflected the district's strong credit rating (S&P: AA-minus), competitive process and market timing. "We ended up getting 4 bids... the winning firm was Fidelity. The interest rate proposed was 4.57, and that was an excellent interest rate," he said.
Finance staff said the lower interest and other favorable elements (underwriter discount and original issue premium) mean taxpayers are likely to see a lower average tax levy than projected before the election: staff estimated about $53 per $100,000 of assessed value versus a previous estimate just under $60. The district emphasized those estimates assume conservative scenarios for the remaining two planned bond series.
Gabe and the underwriter said savings do not expand the district's capital program beyond the bond language but will reduce the levy pressure on taxpayers and that the funds are already available for the scheduled facilities projects on the agenda.
