Board of Trustees moves to take advantage of lower interest rates, excellent credit rating
PCC's Board of Trustees voted Wednesday night to refund nearly $25.3 million in outstanding general obligation bonds, an action that will save district taxpayers roughly $11 million.
The savings come from future property tax assessments that will be lower than expected and expire on a quicker timetable. The bonds, which were approved by voters in 2002 as part of the district's Measure P facilities program, will be repaid by 2027.
Interest rates have declined so substantially since the bonds were issued that the district faced a unique opportunity to make the move, district officials said. Initially issued at 4.43% after receipt of federal subsidies, the refinanced rate will be less than 1%.
Prior to the board's move, the 2002 bonds were set to be paid off by 2034. The board's action shortened that timeline by seven years, so all outstanding debts relating to this series of bonds will be paid off by 2027.
College officials voted twice previously to refinance similar series of bonds in 2014 and 2016. These early actions, combined with Wednesday's vote, have saved taxpayers roughly $20 million in property taxes.
"The district has a history of being a good steward and refinancing voter-approved bonds to reduce future taxes," said Trennis Wright, a senior vice president with Piper Sandler & Co., who is serving as underwriter on the transaction. “Tonight’s unanimous vote demonstrates a continued commitment to that ethic."
Earlier this month, college officials successfully lobbied to upgrade the district's credit rating. PCC currently holds the highest rating it could obtain from Moody's Investor Services (Aa1) and S&P Global Ratings (AA+). Credit advisors commended the district for its strong financial reserves, stable enrollment, and successful outlook under the state's new Student-Centered Funding Formula.
"The folks in our community depend on the college to keep its fiscal house in order," said PCC Board President James Osterling. "This step is only the latest we've taken to steward our resources by maintaining prudent reserves, preparing for pension obligations, and planning for our future while managing our resources responsibly."
The board's action comes as voters are considering a statewide facilities bond on the March 3 ballot. The measure, named Proposition 13, would provide $15 billion in facilities funds for community colleges, public universities, K-12 districts, and preschools around the state.
"We wouldn't be able to do our jobs without our partners in our community," said Erika Endrijonas, PCC's superintendent/president. "With this refinancing, we're able to give back to everyone who has given so much to us."