San Diego CA—SANDAG, serving as the San Diego County Regional Transportation Commission, successfully refinanced a portion of its 2012 Series A bonds and 2014 Series A bonds at lower interest rates, providing significant savings to the region and taxpayers.
The transaction took advantage of historically low taxable interest rates to reduce debt service. SANDAG priced the 2019 Series A Bonds with a total principal amount of $442.6 million. The refinancing pays off certain 2012 and 2014 Series A bonds with lower cost 2019 Series A Bonds, reducing future debt service payments by approximately $93 million (or $63 million on a present value basis) and saving money for the region over the next 29 years. As with the bonds that were refinanced, principal and interest on the 2019 Series A Bonds will be repaid from sales tax revenues collected under TransNet, the half-cent sales tax for transportation approved by San Diego County voters.
SANDAG continues to maintain strong credit ratings, which were affirmed in the process of issuing the Series 2019 A bonds: AAA from Standard & Poor’s (S&P) and Fitch Ratings (Fitch), representing the highest possible rating for both rating agencies. Reflecting San Diego’s diverse and expanding economy which features a growing population and strong wealth levels, sales tax revenues generated by TransNet reached all-time highs in FY 2019.
When the bonds were sold earlier this month with Goldman Sachs & Co. LLC acting as the lead underwriter, investor interest was strong. More than 50 investors participated including a wide range of asset managers, mutual funds, pension plans, and other investors, ultimately leading to a diverse investor base and enabling SANDAG and its financing team to reduce interest rates from initial expected levels at the beginning of marketing.
Since the TransNet program’s inception, annual sales tax revenues have increased from $95.7 million in 1989 to $312.3 million in 2019. The original TransNet Program, which was adopted by county voters in 1987 and funded major transportation projects, expired in 2008.
In 2004, San Diego County voters approved a TransNet extension which began in 2008 and is set to continue for 40 years until 2048. The Ordinance and Expenditure Plan for the TransNet Extension includes funding for additional major highway, transit, and local street and road projects, as well as environmental mitigation, smart growth incentives, bicycle and pedestrian facilities, and related programs.