The San Diego Association of Governments has sold $350 million in tax-exempt, fixed-rate bonds at a 3.85 percent interest rate to finance key transportation projects.
With investors willing to pay a premium for the bonds, the issuance generated proceeds totaling $404 million -- $54 million more than the face value.
The low interest rate at which the bonds were sold means more taxpayer money will go toward project construction, rather than debt service.
“We will use the money strategically to accelerate the completion of a host of infrastructure improvements that will benefit the region’s economy and quality of life,” said SANDAG chair and Santee Councilmember Jack Dale in a statement. “Over the next few years, we will break ground on the Mid-Coast trolley extension from Old Town to University City and the North Coast Corridor rail, highway, and bike projects.”
The bond pricing and sale were completed on Aug. 20 in one day, rather than two days as originally planned, due to exceptionally strong investor demand. The bonds are structured to have final mature in 2048.
Ahead of the bond issuance, SANDAG was given AAA ratings in July by both Fitch Ratings and Standard & Poor’s, in recognition of its financial strength and stability.
The newly-issued debt will be repaid with tax receipts TransNet, the regional half-cent sales tax for transportation projects. TransNet was first approved by county voters in 1987 for 20 years and was extended for another 40 years in 2004.