By Lookout Staff

January 21, 2021 -- Local residents will see their tax bills go down after Santa Monica College (SMC) refinanced a portion of its general obligation bonds last month, school officials said Thursday.

The new rates will save $26.8 million in interest costs that will be passed on to property owners in Santa Monica and Malibu through lower tax bills.

The District took advantage of low interest rates to issue new bonds at a rate of 2.4 percent to refinance previously issued bonds, which carried interest rates between 4 and 5 percent percent, SMC officials said.

There was no prepayment penalty or extension of the repayment period on the bonds, which have been used to fund the new Student Services Center on the Main Campus, upgrade and expand the Center for Media and Design Campus and acquire and retrofit the Bundy Campus.

“At Santa Monica College, we felt that it was imperative to take advantage of the low interest rates so that our community might benefit,” said SMC Superintendent/President Dr. Kathryn E. Jeffery.

“We are pleased with the outcome, and remain tremendously grateful to those who have supported the college and its mission of providing the highest-quality, most accessible education possible to our communities.”

The refinancing bond sale was well received by investors, with more orders for bonds than the amount available to sell, college officials said.

The strong demand was driven primarily by the District’s high-quality credit ratings of “AA+” (S&P Global Ratings) and “Aa2” (Moody’s), which reflect the District’s "prudent fiscal management and the robust local economy," officials said.

The District’s action to refinance the bonds was unanimously approved by the College Board of Trustees in November.

In all, the sale of the District’s new 2020 General Obligation Refunding Bonds, and voter-approved bond election authorizations in 2002 and 2008, resulted in an aggregate principal amount of $201,495,000.

The District’s 2020 Refunding Bonds were sold via negotiated sale, with RBC, Piper Sandler & Co. and Ramirez as underwriters.