Measure L Bond Refinancing will result in $25.8 Million Savings for District Taxpayers

                                                      Delta College Pacific Avenue Entrance

(Stockton, CA) The San Joaquin Delta Community College District has refinanced (refunded) approximately $146.9 million of its Measure L Series 2005A and 2008B Bonds, resulting in a gross savings for District taxpayers of $25.8 million. The $250 million Measure L General Obligation Bond was passed by voters in March, 2004.

“The entire Delta College community is delighted with this terrific news for our taxpayers who have been so supportive,” said Dr. Kathy Hart, Delta’s Superintendent/President. “We are also extremely grateful to our excellent financial team for acting in our taxpayers’ best interest!”

Delta College 2014-15 Board President Steve Castellanos echoes Dr. Hart’s sentiments. “The Board is grateful to the voters for passing Measure L in 2004. We are pleased the college has reduced the cost of borrowing and giving back to our citizens.”

A bond refunding is similar to a home mortgage refinancing to take advantage of lower interest costs. Interest rates are near historical lows, making a bond refunding an attractive opportunity to save taxpayers interest costs on bonds that funded Measure L projects. The District lowered its interest rate on those bonds from an average of 5.59% to 3.00%, resulting in a notable 2.59% interest rate decrease. An added benefit was eliminating $140 million of capital appreciation bonds.

Delta College Controller Raquel Puentes-Griffith points out, “With interest rates expected to rise by the end of 2015, the District has been evaluating refunding options.  In August, we decided to take advantage of this excellent proposal. Yielding a 15.26% reduction of debt service in present value savings (today’s dollars) translates to substantial savings for the taxpayers. The savings that we achieved are considerably higher than other recent and comparable bond refundings. We hit the market at just the perfect time.”

District officials add that continued outstanding credit ratings from Moody’s and Fitch allows the District to take advantage of the lower interest rates and reduces the costs to issue the bonds.

Moody’s issued an Aa2 credit rating on the District’s bonds which is considered extremely positive.  Fitch has assigned the District a similar AA- rating for the bonds, reporting key drivers that include:
“A sound financial position” with financial operations that are “consistently balanced”, and “reserves that remain healthy”; an experienced management team that “capably managed volatile State funding and enrollment”; and a “recovering economy.”

The financial implications are “all positive” according to Puentes-Griffith. “Maintaining the District's strong credit ratings means Delta College can continue to enjoy lower short and long-term borrowing costs as we return to the market to issue the final series of bonds in the next two years.” Puentes-Griffith finishes, “Those lower borrowing costs are great news for our District’s taxpayers.”