City Nets Substantial Savings From Bond Refinancing and Prepayment
On Thursday, November 2, 2017, the City received extremely competitive bids on bonds that will refinance $35.6 million in bonds used to fund the City’s investment in the Lewis and Clark Water Project. The City received 16 competitive bids on the bonds and accepted the lowest bid from J.P. Morgan Securities, LLC, with a true interest cost of just 1.80 percent on the nine-year, tax-exempt bonds.
“This incredible borrowing rate is a testament to our city’s financial strength and prudent use of bonds to fund long-term investments. We are incredibly happy with the results of the sale,” says Tracy Turbak, Director of Finance.
In addition to refinancing the bonds at a much lower rate, the City prepaid $25 million in bonds. This refinancing and prepayment will reduce the outstanding term of the bonds by ten years and save the Water Fund $25.8 million in payments. Accounting for the time value of money, the present value of the savings is $15.5 million.
“One of the most important aspects to a good quality of life is a safe, reliable water supply. The City of Sioux Falls has been able to provide that to our community with very affordable rates that also allow us to reinvest in infrastructure, ensuring the system’s reliability well into the future,” says Mark Cotter, Director of Public Works.
An informational presentation outlining the benefits of this refinancing was provided to the City Council on September 12, 2017, and can be viewed at www.siouxfalls.org.