Water Revenue Bonds Refinancing to Save Town $686,000
During Tuesday night’s meeting, the Board approved an ordinance authorizing the issuance and sale of Town of Erie, Colorado, Taxable (Converting to Tax-Exempt) Water Enterprise Revenue Refunding Bonds, Series 2017. This refinancing is projected to save the Town approximately $686,000 on a cash flow basis and $526,000 on a present value basis, a savings of 12%, which is well above the GFOA recommended minimum of 3-5%. The proposed refunding will be a private placement with Centennial Bank & Trust, who was selected as the result of a request for bid process.
BACKGROUND: Last November the Board approved an ordinance to refund the 2007 A Water Revenue Bonds, a portion of the 2007B Water Revenue Refunding Bonds, and a portion of the 2009 Water Revenue Refunding Bonds, issued primarily to finance construction of various waterlines, the water treatment plant, and other water system infrastructure, in order to reduce the interest costs of its revenue bonds. Unfortunately, interest rates subsequent to the November election rose to the point that the refunding as originally planned was no longer economically viable.
The Town’s bond advisor and bond underwriter identified a different financing structure that would allow the Town to refinance a portion of the bonds originally planned to be refunded - the 2007 A and all but one maturity (2017) of the 2007B issues -through the issuance of approximately $4,700,000 in taxable (convertible to tax exempt) refunding bonds.