Board Refinances Road Tax Bonds

The District issued $8,875,472 limited tax road bonds in 2004 to repay the developer of the District for certain road infrastructure within the District. The 2004 bonds became "callable" (pre-payable) on December 1, 2014 at face value plus a 2% premium, such premium was to be reduced by 1% every year on each December 1st until reaching 0% on December 1, 2016.

In November of 2015, the District approved a plan of finance to execute a refinancing of a portion of the 2004 bonds ($6,460,000) for debt service savings. The plan called for an issuance of series 2016 limited tax road bonds to pay off a portion of the 2004 bonds and achieve average annual gross savings of at least $35,000 per year or a total gross savings of $630,000.

On January 25 2016, the District went to the municipal bond markets to sell its $6,459,743 Limited Tax Road Refunding Bonds, Series 2016 transaction. The transaction resulted in a reduction of interest rate from 4.96% to 4.15% (fixed through final maturity in 2034), total gross savings of $825,186 or $45,594 average annual gross savings per year. The present value savings ratio, which was targeted at no less than 4.35%, ended up being 6.37%; most utility districts have minimum targets of 3% for execution of a bond refinancing transaction.

The transaction closed on February 25, 2016 and the portion of the 2004 bonds that was refinanced was paid off on March 1, 2016. The debt service savings are to be realized beginning with the next budget cycle.


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