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Santa Rosa Refinances Wastewater Bonds SAVING $16.5 Million

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Santa Rosa Refinances Wastewater Bonds SAVING $16.5 Million

For the second time in four years, the City of Santa Rosa and its Board of Public Utilities have demonstrated their stewardship of rate payer dollars by refinancing $54.63 million of wastewater revenue bonds as well as $53.8 million of outstanding State Water Resources Control Board loans. On July 19, 2016 the City was able to take advantage of near historical interest rate lows in the market, refinancing the bonds and State loans to an all-in true interest cost of 1.43% with a final maturity in 2028.

Prior to the refinancing, the City of Santa Rosa’s Wastewater System had over $250 million of revenue bonds and State loans outstanding; after the refunding the System has approximately $238 million in revenue bonds outstanding. Refinancing at significantly lower interest rates will result in net savings to rate payers of $16.5 million over the life of the bonds. The refunding bonds were structured to maintain budgeted fiscal year 2017 debt service while retaining capacity for planned future issuances to finance capital improvements to the wastewater system.  

The savings will be utilized for system operation and maintenance and capital improvement projects related to wastewater treatment and the beneficial reuse of recycled water and biosolids. This includes systematically replacing aging infrastructure, watershed protection, and the beneficial reuse of water resources.  The refinance also has the potential to reduce future bond debt as a result of having additional funds to invest in the system.

Over the years, Santa Rosa’s Wastewater System credit has continued to strengthen, as evidenced by rating upgrades from Standard and Poor’s (S&P).  In July 2013, S&P upgraded the Wastewater Systems’ debt from “A+” to “AA-“.  In April 2014, S&P assigned its “AA-/Stable” rating to the bonds and affirmed the ratings on the System’s other outstanding bonds. In July 2016, citing the System’s strong operational management practices and policies and other credit strengths, S&P raised its long-term rating on the City’s outstanding wastewater revenue bonds to “AA/Stable” and assigned the same “AA/Stable” rating. Moody’s assigned its “Aa3” rating to the Bonds.