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This K-12 school district was interested in taking advantage of the decline in interest rates by refunding its existing General Obligation bond issue. However, the current bonds were not callable for six months, and the new tax bill had eliminated advance refundings. First American was able to provide a forward rate commitment to purchase the bonds in a private placement that allowed the district to take advantage of lower rates without having to wait six months and risk rates increasing. As a result, the district lowered its effective interest rate by 1.73% and realized a net present value savings of over $840,000.
A local park district was looking to refund its existing Alternate Revenue Source bonds in order to level out their debt service and take advantage of current lower interest rates. The new bonds would have a 12-year final maturity with three potential structures: callable in six years, callable in eight years, and non-callable. They were also looking for a three-month forward rate lock. By purchasing the bonds directly, the bank was able to provide structuring flexibility while saving the district over $125,000.
One of the bank’s municipal customers was looking to incentivize a developer to construct a new housing development through funding water, sewer and other infrastructure improvements. Working with counsel, they created a special tax assessment district that allocated the costs to each home site’s property tax bill over 10 years. The bank then purchased Alternate Revenue Bonds, payable from the special tax assessment, but also backed by a general obligation tax levy. This innovative structure allowed the developer to commit to the project, with plans for 32 single family homes, 66 duplex lots, and 16 condominiums.