Funding Transportation Infrastructure, Reducing Debt Service Costs, and Extending Efficient Contracts.


On Tuesday, the State Finance Committee adopted resolutions aimed at financing additional transportation projects, generating savings through refinancing, and extending the state’s fiscal agent contract to reduce service fees for state and local government through economies of scale.

Perhaps the most notable of the three passed Tuesday was Resolution No. 1218, which will allow the refunding of bonds for the purpose of refinancing.

“Today’s resolution is a step in the right direction.”

Background: In 2009, the Department of Information Services, now Consolidated Technology Services (CTS), entered into a financing contract for the construction and lease-purchase of an office building and data center known as the 1500 Jefferson Building, located on the “Wheeler Block” of the Capitol Campus.

Over the past several months, the Office of the State Treasurer (OST) has approached CTS about the potential debt service savings that could be achieved by refunding the 2009 Bonds.

In collaboration with the Office of Financial Management (OFM), and taking into account other factors and costs associated with various refunding scenarios, CTS and OFM have ultimately concluded that it is most advantageous to refund the 2009 Bonds with a new issue of 63-20 bonds.

“Today’s resolution is a step in the right direction to save taxpayer dollars and lessen the burdens of the State,” said State Finance Committee Chair State Treasurer Duane Davidson.

Savings: The refinancing is expected to significantly lower debt service costs and in turn reduce the state’s lease payments for this facility. Based on interest rates as of October 25, 2018, the refunding will produce savings of approximately $40.5 million on a present value basis, or $56.5 million on a nominal basis over the life of the bonds. This represents present value savings of 15.15% of the refunded bonds, and annual debt service savings of $2.8 million.

More on this resolution and others passed this day is available at the agenda packet.