Editor's Note: The following is a news release from the San Diego Association of Governments (SANDAG).
SANDAG has raised $300 million to fund high-priority regional transportation projects outlined in its TransNet Early Action Program by issuing long-term, fixed-rate debt.
“It’s a testament to our fiscal stewardship and strength when investors bought up our bonds in a matter of hours,” said SANDAG Chairman and Encinitas Mayor Jerome Stocks. “By being ready to go, SANDAG was able to be at the right place at the right time and obtained very favorable interest rates, allowing us to continue investing in our needed regional infrastructure.”
The bonds, which went on the market last week, were sold at an interest rate of 4.1 percent. Investors snatched them up in about two hours.
In addition to the new bond issuance, SANDAG also went to the market last week to refinance $151 million of variable rate bonds and converted them to fixed rate bonds at zero net cost. The conversion reduces SANDAG’s exposure to variable interest rate risk and counterparty risk with related liquidity facility providers.
The new bond issuance will help SANDAG meet the near-term cash flow needs of the Early Action Program, which includes a host of major infrastructure projects stretching from Oceanside to the U.S.-Mexico border. Early Action projects include: widening State Route 76; extending Trolley service to University City; implementing a package of highway, coastal rail, environmental, and coastal access improvements in the North Coast Corridor along Interstate 5; and establishing Bus Rapid Transit services along Interstates 15 and 805.
Most recently, TransNet money enabled SANDAG to acquire the State Route 125 toll road, also known as the South Bay Expressway.
The newly-issued debt will be repaid with tax receipts from TransNet, a regional half-cent sales tax for transportation projects. TransNet was first approved by county voters in 1987 for 20 years and was extended for another 40 years in 2004. Over the 60-year period, TransNet is expected to generate more than $17 billion for highway, transit, and local road projects.