SDCCD: District Saves Taxpayers $38.1M By Refinancing Bonds

Press release from San Diego Community College District:

February 23, 2022

San Diego taxpayers will experience gross savings of $38.1 million in bond debt as
a result of the San Diego Community College District’s (SDCCD) sale of $523.2 million
Taxable General Obligation Refunding Bonds on December 7, 2021.  The bonds sold were
to replace existing outstanding bonds for Propositions S and N at a lower interest
rate without extending debt beyond the original maturity dates. 

Since the passage of Proposition S (2002) & N (2006) and sale of original bonds, the
district has sold five refunding series resulting in $308.6 million in combined City
of San Diego taxpayer savings.

The move to refund – or refinance – the outstanding bonds that funded a transformation
of SDCCD campuses comes after the nation’s benchmark bond-rating agencies again assigning
the district their highest rating possible: S&P Global assigned a rating of AAA to
SDCCD’s bonds; Moody’s Investors Service also assigned its Aaa rating. The “triple
A” rating was due to both agencies lauding the SDCCD’s financial management practices
and policies, reserves and low debt burden, in addition to the strength of the regional
economy. 

The ratings not only allowed the SDCCD to re-fund bonds at a lower interest rate,
but also eliminated previously issued capital appreciation bonds. Capital appreciation
bonds enable school and college districts to borrow money for construction projects
and pay it back with compounded interest decades later. While the SDCCD did not issue
many capital appreciation bonds, eliminating those previously issued significantly
contributed to taxpayer savings.

“This marks the third time in five years the San Diego Community College District’s
responsible fiscal policies have allowed it to refinance voter-approved bonds at a
lower interest rate and save local taxpayers millions of dollars,” said SDCCD Chancellor
Carlos Cortez. 

The SDCCD has consistently earned high scores from the San Diego Taxpayers’ Education
Foundation’s School Bond Transparency in San Diego County Summary Report, which looks
at the availability and accessibility of public information on bond programs. 

The $1.555 billion Propositions S and N construction bond program has allowed the
SDCCD to transform San Diego City, Mesa, Miramar, and Continuing Education colleges.
Proposition S authorized the sale of $685 million in bonds and was approved by voters
in 2002. Proposition N authorized the sale of $870 million in bonds and was approved
by voters in 2006. The Propositions S and N financed construction of 36 new buildings
and 18 renovations across the district.

This press release was produced by San Diego Community College District. The views expressed here are the author’s own.