Last year the District issued eighty-five million($85,000,000) dollars of 25-year municipal bonds to fund numerous upgrades to the water and sewer system infrastructure. In the spring of last year, the Board, which had been contemplating the sale of the bonds for a couple of years, determined to go forward with the sale. One of the first steps was to obtain a bond rating. This resulted in the District receiving a rating of “AAA” from Standard and Poor’s Global Ratings, the highest rating obtainable by a municipal issuer. After the District’s bond underwriter marketed the bonds, the sale was completed in mid-September. The District received an “all-in” annual interest rate of approximately 2.2%.
As you would expect, interest rates are much higher now. Were the District to have sold the same bonds in September of this year, the likely annual interest rate would have been in the neighborhood of 4.2%. The annual costs of bonds issued this year would be about one million one hundred twenty five thousand dollars ($1,125,000) higher. Correspondingly, the cost of the bonds overthe2-year repayment period would be approximately twenty-eight million dollars($28,000,000) higher. Clearly, the large savings on these bonds is going to help keep rates lower for many years!