A big win for SR 520 toll payers

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OLYMPIA, WA. On Wednesday, the Washington State Treasurer’s Office sold $396,315,000 of Motor Vehicle Fuel Tax General Obligation Refunding Bonds (Triple Pledge Bonds-SR 520 Toll Revenue) to take advantage of low interest rates and lock in $102 million of debt service savings for the state’s SR 520 toll bridge.

“Today’s sale was a big win for SR 520 toll payers. The significant debt service savings that we locked in will provide a boost to the financial health of the SR 520 facility and will help reduce the need for future rate increases,” Treasurer Davidson said.

On behalf of the State Finance Committee, the Treasurer’s Office sold the refunding bonds to refinance $458,915,000 of debt issued in 2011 to finance a portion of the state’s SR 520 floating bridge project.

Like the 2011 bonds, the refunding bonds are structured as triple pledge bonds, meaning that principal and interest on the bonds is to be repaid from net SR 520 Toll Revenue, with an additional pledge of Motor Vehicle Fuel Tax Revenue, further secured by the full faith and credit of the state.

Because of federal tax law changes in 2017, which prohibited the issuance of tax-exempt advance refunding bonds, the Treasurer’s Office elected to issue forward delivery bonds to lock-in impressive net present value savings of $76.4 million, or 16.65%. This equates to more than $5 million of annual cash-flow savings for the SR 520 system from FY 2022 through FY 2041.

“Five million of debt service savings per year. I couldn’t be happier with the results of this sale. My team has been burning the midnight oil to get this refinancing to market. With some innovative thinking by my team, and the strong investor demand that we received today, we hit a home run for SR 520 toll payers,” Davidson said.