Eagle-Vail Metro District completes bond refinance at lower interest rate to reduce future taxes
November 19, 2017
EAGLE-VAIL — The Eagle-Vail Metropolitan District completed the refinance of its 2009 bonds at a lower interest rate, which will reduce future borrowing costs and taxes for Eagle-Vail property owners.
Refunding of the bonds will reduce future borrowing costs by about 10 percent on $5 million in bonds. The interest rate on the newly issued bonds is just below 3 percent, as compared to an average rate of 4.85 percent on the previously issued bonds in 2009. The new bonds have the same repayment term as the original 2009 bonds, with a final maturity in 2035.
The net present value of the interest savings is $555,000, or about 10 percent of the bonds outstanding. No increase in debt was incurred through this refunding.
The financial benefits will directly benefit taxpayers in Eagle-Vail by reducing the taxes levied for debt service. The interest cost and corresponding property taxes will be reduced in 2018 through a reduction in the mill levy rate. For a home valued at $500,000, the savings will be approximately $16 per year. A proportional amount will apply to homes with a greater value.
A refunding involves issuing new bonds that will be used to repurchase previously outstanding bonds to take advantage of lower interest rates. The bonds were rated A+ by S&P and were oversubscribed. The underwriter was Stifel, a leading underwriter of state and local debt throughout the United States. The debt service was less than originally approved by taxpayers in 2009, and therefore there was no requirement to seek taxpayer approval to reduce the interest cost of the debt.