Dollars and Cents
by Commission President Steve Tucker
In June, the Port was able to complete the refinancing of a portion of our outstanding bond obligations, saving taxpayers more than $450,000. While bond refinancing may not seem like the most exciting thing in the world, it actually is a very big deal. If you’ve ever owned a home via a mortgage, and then taken advantage of low interest rates to refinance that mortgage, you’ve probably experienced the same kind of savings in your own household budget; refinancing debt saves real money that directly impacts the bottom line.
While the overall interest rate situation was an important piece in moving forward with the refinancing, there is another critical factor that enabled the Port to realize such a significant savings. Our recent State audit.
Part of the vetting process for issuing bonds is a ratings review. The higher the rating, the lower the interest rate. Again, its similar to the credit review you get when refinancing your house. If you have good credit, you’ll get a better rate. In the Port’s case, Moody’s Investor Service – the rating agency for the bonds – gave the Port an A1 rating, one of the highest ratings possible. They indicated that our recent positive State audit, which continued a 20 year track record of responsible financial stewardship, played a major role in awarding us that A1 rating. Our stability and good track record allowed us to access the bond market in a premium position. Just refinancing at the the normal historical low of that day would have saved the Port about $340,000. Due to the strength of our rating, our bonds were offered at a lower rate and achieved an additional $110,000 savings, bringing the total to over $450,000.
All of this is a reminder that good management of the Port directly equates to dollars and cents. As you know, the Port has a considerable list of capital and maintenance needs – so any additional funds that can be directed towards those issues is a net positive for the community. We now have an additional $450,000 over the next 10 years that we can allocate towards these projects.
Unless you are a finance junkie, bonds certainly aren’t the sexiest things to think and talk about. But in this case, we all can be pleased with the savings we’ve achieved in this bond refinancing.