A break is on the horizon for Contra Costa County. The Contra Costa Community College District recently sold bonds to refinance $106,565,000 of Measure A general obligation bonds.
The refinancing took place by investment banking firm E. J. De La Rosa & Company along with the assistance of Backstrom, McCarley, Berry, & Co. LLC. By way of lower property taxes, the refinancing will save property owners in Contra Costa County $729,000 yearly through the year 2032, totaling over $14.5 million.
“It provides savings to the taxpayers,” said Dr. John al-Amin, vice chancellor for administrative services. “While it does not provide any new money for the colleges, they will still receive the bond money and can utilize programs for the school. The end result is that taxpayers will now no longer pay as much for the bonds and will save that money.”
While college students will be aided by these bonds funds, those who will be most affected by the refinancing are the tax payers of Contra Costa County, where the change will be reflected in the voters’ 2013-14 property tax bills. The Contra Costa Community College District is one of the largest multi-community college districts in California, serving a population of 1,019,640 people.
“The district was able to take advantage of historically low interest rates in the municipal bond market,” said Vice Chancellor for Communications Tim Leong. “We were able to secure low interest rates because of the district’s great credit ratings we received from both Moody’s Investors Service and Standard & Poor.”
Driven by its adherence to sound fiscal management practices as well as its high credit rating, the District was able to secure lower interest rates for these bonds, and as a result received an “Aa1” rating from Moody’s Investors Service along with an “AA” rating from Standard & Poor based upon their review of the District’s financial position.
“Think of obtaining a mortgage at 7% interest, and then you were able to refinance at 5%,” added Leong “That 2% savings means reducing your monthly payment substantially over the term of the loan. On average, the bonds we refinanced averaged about 1% higher in interest rates thus saving taxpayers about $729,000 a year, or the $14.5 million over the life of the repayment term.”
Although these bonds do not impact students directly, Leong noted that the results of these bonds funds can be seen and felt throughout the campus.
“At LMC, bond funds were used to build the new math and science buildings, the library, and the quad area. Now the college is using those funds to remodel the core center, and bring all the student services together for a better student experience once the remodel is completed. We also plan to use some of the bond funds to build the new Brentwood Center.”
The refinanced bonds were a part of a series of bonds issues under Measure A bond authorizations that was approved by voters in April 2002 and in March 2006. The proceeds from these bonds will be used to help transform college campuses throughout the district, and providing repairs to facilities to improve energy savings, safety, and handicapped accessibility. Vocational program facilities, such as nursing, police, culinary arts, and technological programs will also be improved, in addition to transfer programs at Contra Costa College, Diablo Valley College, Los Medanos College, San Ramon Valley Center and improvements to the Brentwood Center.
“It is contingent that we have some bond money set aside,” added al-Amin. “We have bond funding, but we are hoping the state can pass another bond so we can get some additional funding. Right now, we are looking at finalizing some more details. Hopefully this will begin in the next couple of years.”
This is now the second time the district has refunded bond proceeds. Last year, the District refinanced $41,350,000 of Measure A general obligation bonds that were originally issued in 2002. As a result, Contra Costa County property owners saved over $5.3 million through 2026.
