On Oct. 15, the Johnson County Board of County Commissioners authorized a series of bond sales to refinance existing debt in light of current lower market interest rates, saving taxpayers millions of dollars.
The Board authorized the sale of $54.4 million in general obligation refunding bonds, and then sitting as the Public Building Commission, also approved the sale of $6,845,000 in Lease Purchase Revenue Refunding Bonds. These actions are estimated to save taxpayers almost $6.5 million through the redemption of four outstanding bond issues by using the proceeds from a new debt issue.
“We were pleased to take advantage of low interest rates,” said Chairman Ed Eilert. “The interest savings benefit Johnson County taxpayers in financing public capital improvements at the lowest costs.”
The refunding transactions involved:
• GO taxable refunding totaling $49,660,000 to refinance bond issues in 2012 and 2013 for wastewater improvements with an estimated savings of $5,090,000.
• GO refunding of $4,760,000 to refinance 2010 bonds, also for wastewater improvements, with an estimated savings of $574,000.
• Lease Purchase Revenue Refunding Bonds of $6,845,000 by the PBC with an estimated savings of $793,000. The original bonds, issued in 2010, funded construction of the new building for the Department of Public Works.
• The interest savings are spread over the remaining life of the bond issues.
The $49,660,000 GO taxable refunding bonds were sold at an interest rate of 1.31% while the tax-exempt refunding bonds were sold at a true interest cost of 0.81%. The PBC authorized its refunding bond sale at 0.94% true interest cost.
Since July, the BOCC has authorized two other GO bond issues, totaling $105 million, and the PBC has approved two other refunding bond issues for $27.6 million. The transactions involved refinancing previous bond issues at higher interest rates.
The county estimates the total savings from refundings in 2020 to be over $13 million. Rates averaged between 0.33% to 0.94% for the tax-exempt refunding bonds and 1.06% to 1.31% for the taxable refunding bond issues. The county’s excellent credit ratings attracted strong investor interest in purchasing Johnson County bonds. Moody’s Investors Service, Fitch’s Ratings and Standard & Poor’s all affirmed the top AAA bond ratings in their latest review. The latest rating reports cited the county’s growing reserves, strong management and stable economic outlook among its credit strengths.
Johnson County has maintained a triple-triple benchmark since 2010 and has saved an estimated $31 million by refunding existing debt service as a result of the top bond ratings since then, including Thursday’s transactions.
In other action, the PBC took advantage of current low interest rates to issue $5,840,000 in Lease Purchase Revenue Bonds for renovations and improvements to the Central Resource Library in Overland Park. The project, with an estimated cost of $11.1 million, will be additional financed with $5 million from Johnson County Library. The bonds were sold at an interest rate of 1.81%.