Carmel’s refinancing bonds sold today at 3.24 percent for a total savings through refinancing of $75 million, with a present value savings of $55 million. The sale included taxable and tax-exempt bonds.
There were $69.245 million in taxable bonds and $115.9 million in tax-exempt bonds sold today for a total of $185 million.
The refinance is for funds that have been used in Carmel’s redevelopment projects and will be paid by non-residential taxpayers even though Carmel agreed to provide a general property tax back-up in order to obtain a lower interest rate.
Standard & Poor’s (S&P) announced last Tuesday, December 4, 2012 that Carmel has been assigned a strong AA+ rating for its new 2012A and 2012B bond series. In addition, S&P affirmed its AA+ long-term rating on previous 2005 and 2011 lease rental revenue bonds. S&P said the outlook on all the ratings is “stable” and should remain the same for the two-year outlook due to Carmel’s “detailed focus on long-term planning” and the city’s “healthy economy” and the city’s fiscal management was described as “good.”
There was some competition in the bond sale market today and all of the Carmel bonds sold. There was more than $11 billion in today’s bond market compared to an average of about $5 billion. The market is still at record lows and was an excellent time to lock in a long-term fixed rate financing. This eliminates Carmel’s risk of paying higher interest rates in the future in the current rising interest rate environment.
“This news should reassure the Carmel community that they are on strong financial footing. Standard & Poor’s is an independent and unbiased evaluator of bond securities throughout the world. Their ‘AA+’ bond rating is great news for Carmel,” said Loren Matthes, principal with H. J. Umbaugh & Associates Certified Public Accountants.
In their report, S&P analysts said that their ratings were based on the city’s general creditworthiness and pointed specifically to the following three factors taken directly from S&P’s findings:
- A diverse and expanding local tax base that benefits from participation in the deep Indianapolis metropolitan area economy;
- Very strong incomes and extremely strong wealth, coupled with consistently below-average unemployment; and
- Strong financial position when factoring in general plus non-general fund available reserves, as measured on a cash basis of accounting.
“We are pleased that these independent and objective analysts recognize Carmel’s strong fiscal health. This confirms that even through the worst recession in recent history, Carmel remains a solid investment. We have a talented team of department heads who work diligently on strategic fiscal planning and implementation and together we have been able to accomplish great things while keeping Carmel’s property taxes among the lowest in Indiana,” said Mayor Brainard.
“It is very rare that we have the opportunity to build a project at what has turned out to be some of the lowest construction costs in a lifetime and then refinance our redevelopment projects at interest rates that are some of the lowest of a lifetime. This is truly a win-win for Carmel,” said Bill Hammer, Carmel Redevelopment Commission President.