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Foothill-De Anza refinances bonds, saving taxpayers $26.6M

Original post made on May 11, 2021

Taking advantage of favorable interest rates, the Foothill-De Anza Community College District has refinanced general obligation bonds issued in 2012 and 2014, as well as a portion of bonds issued in 2016.

Read the full story here Web Link posted Tuesday, May 11, 2021, 12:52 PM

Comments (3)

Posted by SRB
a resident of St. Francis Acres
on May 11, 2021 at 2:13 pm

SRB is a registered user.

Always good to reduce interest costs for the district as it stretches value of our tax dollars.

But not clear how "it has saved district taxpayers $26.6 million". Did our taxes go down? Will our taxes be phased out sooner?

Posted by Steven Nelson
a resident of Cuesta Park
on May 17, 2021 at 10:32 am

Steven Nelson is a registered user.

Good questions. "It will save the district ..." might be a more appropriate wording. This works very much like a "refinance" of a home loan. The existing bonds (loans from investors) are paid off and new bonds are sold AT A LOWER BORROWING RATE to investors for the same principal amounts. (this can be done in different ways).

Bond election 'promises' of tax rate increases are actually 'just estimates' of what the projected tax increases will be to pay off the new (bond) borrowing over the decades (bonds can be sold for different total years - just like mortgages). It is possible that the ACTUAL TAX RATE increases will be more or less than the bond election 'promises'.

There are various "reserve funds" used to store funds for the cash flows that are necessary for investor payments and incoming taxes. These are adjusted (over the years) as the bond portfolios of the district change. The "$16" per $100,000 of AV may be adjusted (up or down) based upon the total amount of outstanding (debt obligations) a district is legally allowed to carry. Sort of like - how much a homeowner is allowed to take a loan for!

- what you learn on the job -
retired Mountain View Whisman SD Trustee

Posted by LongResident
a resident of another community
on May 17, 2021 at 1:35 pm

LongResident is a registered user.

The payback on the bonds will go down on the yearly property tax bills. They
don't shorten the period and make larger principle payments. The reduced interest rate translates directly into a lower annual amount for the bonds on property tax bills. The payback amount also goes down if the aggregate assessed value goes up, so they normally go down every year anyway, by more than the increase of most property, as more of it is paid by newly resold properties.

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