RTD committee advances plan to refinance FasTracks bonds
The proposal could eliminate an $18 million debt-service reserve requirement and reduce subsidy risk, but staff do not project significant overall interest savings.
The Regional Transportation District’s Finance and Planning Committee on Sept. 15 advanced a proposal to refinance all or part of the agency’s taxable Series 2010B FasTracks Build America Bonds. The full RTD Board is scheduled to consider the proposal Sept. 22.
All seven directors listed in the committee minutes voted for the motion to send the bond-refunding resolution to the board. The committee action does not constitute board approval.
Under the proposal, RTD could issue Series 2026B refunding bonds to redeem some or all of the 2010B bonds. RTD staff said the transaction is not expected to produce significant overall interest savings under current market conditions, but it could eliminate the agency’s obligation to maintain an $18 million restricted debt-service reserve, reduce the risk of cuts to federal subsidies for the Build America Bonds through sequestration and lower debt service in some years.
The staff report and proposed resolution would limit annual debt service on the refunding bonds to the debt service on the refunded bonds before accounting for the federal interest subsidy. It also sets a maximum net effective interest rate of 8%, allows a possible refinancing within 10 years and sets a final maturity no later than Nov. 1, 2050.
The amount of 2010B debt RTD would refinance, final pricing and other transaction terms remain undetermined. The committee’s action does not establish that the reserve has been released, debt service has been reduced or savings have been realized.