California Statewide Communities Development
Authority (CSCDA) Water and Wastewater Revenue Bonds (Pooled Financing Program)
We are pleased to announce the successful sale of $27,840,000 Water and Wastewater Revenue Bonds issued by CSCDA (a joint powers authority between the League of California Cities and the California State Association of Counties) on August 22nd 2005. This brings the total par amount issued by the Pooled Revenue Bond Program to over $377 million in 21 series of “AAA” Bonds for 53 borrowings for California municipal cities, agencies and special districts.
These Bonds (Series 2005C) were the first ALL REFUNDING series since the Pool’s inception in 1998. In fact, 3 of the 4
refundings in this issue refunded outstanding Pool Bonds and were repeat borrowers. The four (4) participants were the Sonoma County Water Agency (SCWA), the South Park Sanitation Zone, the Sonoma Valley County Water District and the City of Eureka.
The net interest cost was 4.27% with a final maturity of 2026. All of these refundings had net present value savings in excess of 3%. Of special note was the release of over $1.6 million held in reserve funds for 2 participants by substituting a surety bond provided by the insurer.
Less than one week following the Bond Sale, Hurricane Katrina hit. The yield on the 10-year Treasury note fell immediately after the storm hit briefly, on the view that economic growth would be hindered, but it has since risen above its pre-hurricane levels. It appears that an aftereffect of Katrina may be higher interest rates. Bond market participants have begun to worry that the amount of money – estimated at $200 billion and higher – that will be pumped into reconstruction efforts will prove inflationary. And as expected, the Federal Reserve raised the fed funds rate another quarter percent on September 20th.
Congrats to Kiergan Pegg at SCWA and Carolynn Thomas (City of Eureka) for recognizing this refinancing opportunity and taking advantage of these historically low interest rates. The market window was narrow and through their efforts and quick response they achieved their targeted savings goals.
The Water and Wastewater Program finances projects on an average of 53 days from application. The next Revenue Bond Issue (2005D) for water and sewer projects is expected to sell on October 25th.
Upcoming Pools
| Water & Wastewater Pool |
Bond Sale Date |
Application Deadline |
| CSCDA 2005D |
10/25/2005 |
Closed |
| CSCDA 2006A |
January 2006 |
12/22/2005 |
|
