$3.3 Million Civic Center Lease Refunding (Private Placement)
Kosmont Transactions Services (“KTS”) was the Municipal Advisor to the City of San Dimas on a unique transaction that closed in March 2020. San Dimas issued bonds in 2010 to rehabilitate its Civic Center. With the low prevailing interest rates, KTS identified an opportunity in the fall of 2019 to refinance the 2010 bonds to produce debt service savings for the City. The 2010 bonds were not eligible for early redemption until June of 2020 and the Tax Cuts and Jobs Act of 2017 changed the tax code such that advance refundings of tax-exempt municipal bonds are no longer allowed.
Given the relatively smaller size of this issue, as well as the short term remaining to repay the 2010 bonds (about five years), KTS identified a lending partner that was not only willing to buy the entire refunding bond issue, they also agreed to lock the rate and delay the closing long enough for 2010 Bonds to become “currently callable”, removing the obstacle of potentially having to issue taxable advance refunding bonds.
The private placement enabled the City to benefit from lower issuance costs due to efficient disclosure requirements and marketing efforts. The City realized healthy net present value savings of over 4%, including the realization of immediate savings in the current fiscal year.