City Saves Again on Bond Refinancing and Prepayment
On Tuesday, March 13, 2018, the City received extremely competitive bids on the sale of bonds that will refinance the remaining $15.8 million in bonds originally issued in 2007 to fund the City’s investments in Harmodon Park, the Drake Springs Family Aquatic Center, and the Downtown Library. The City received 11 competitive bids on the bonds and accepted the lowest bid from J.P. Morgan Securities, LLC, with a true interest cost of just 2.14 percent on the eight-year tax-exempt bonds.
“We are incredibly happy with the results of the sale. The City’s financial strength and prudent use of bonds to fund long-term investments continues to pay dividends to the taxpayers in the form of incredible borrowing rates,” says Tracy Turbak, Director of Finance.
In addition to refinancing the bonds at a much lower rate, the City will prepay $1.5 million in bonds. This refinancing and prepayment will reduce the outstanding term of the bonds by two years and save the Sales Tax Fund $3.3 million in payments. Accounting for the time value of money, the present value of the savings is $2.0 million.
“In addition to significantly lowering interest costs under this transaction, shortening the term by two years will maximize the City’s ability to tackle future projects by recapturing bonding capacity well ahead of schedule,” says Turbak.
Informational presentations outlining the benefits of this refinancing were provided to the City Council on February 5 and 13, 2018, and can be viewed at www.siouxfalls.org.