Refinancing Results in Debt-Service Savings; Credit Rating Upgraded
April 15, 2014
Placer County earned a significant savings and a higher credit rating recently when it refinanced municipal bonds originally issued to help finance construction of buildings in North Auburn and Roseville.
“This is great news for Placer County and its residents,” Board of Supervisors Chairman Jack Duran said. “A credit review found plenty of positives in our county – including a strong, diverse economy. I was particularly pleased to see our county government get high marks for its budget performance and management team. Maintaining a solid financial footing is a top priority for the Board of Supervisors, and the credit review clearly shows we are on the right path.”
“The market response to the County’s refinancing was very positive,” explained Treasurer-Tax Collector Jenine Windeshausen. “This refinancing resulted in significant debt-service savings and an upgrade of the County’s credit rating.”
Placer County originally issued the refinanced securities, known as Certificates of Participation (COP), to help finance construction of two buildings:
- The Larry Oddo Finance Administration Building at the Placer County Government Center in North Auburn and
- The courthouse building at the Bill Santucci Justice Center in Roseville.
The first building was completed in 1998 and the second was finished in 2008.
The Board of Supervisors approved the refinancing plans on March 11. In a memo to board members, Windeshausen noted that low interest rates offered the County an opportunity to reduce its long-term debt by refinancing the COPs.
She reported that the refinancing resulted in a gross savings of almost $2.2 million on $33,780,000 in outstanding debt.
In the process of refinancing, Standard & Poor’s conducted a credit review that resulted in the County’s issuer credit rating being upgraded from AA to AA+ with a stable outlook.
In a summary, Standard & Poor’s said Placer County is very strong in three of the six areas considered in the credit review: budgetary flexibility, liquidity, and debt and contingent liabilities position. The County was classified as strong in the other three categories: its economy, budget performance and management conditions.
The Treasurer-Tax Collector’s Office worked on the refinancing in cooperation with the County Executive Office, Auditor-Controller’s Office, County Counsel and the Facility Services Department.