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Crews work beneath the San Elijo Lagoon highway bridge in Encinitas. Photo via Facebook
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Regional transportation agency to refinance, issue new bonds

REGION — SANDAG, a regional transportation agency and clearinghouse for big federal transportation dollars, is laying the groundwork through February to issue up to $275 million in sales-tax-backed bonds during 2021.

Of the total, up to $100 million would represent new money for planned infrastructure projects across the region, according to information SANDAG board members received preliminarily at their Jan. 22 meeting.

The board’s Transportation Committee will consider the matter in greater depth at its Feb. 5 meeting. While appointments for 2021 aren’t yet finalized, the Transportation Committee will include at least three North County municipal officials. Final bond documents will come before the full board on Feb. 12, ahead of an anticipated March 22 closing.

New bonds would go toward capital improvements planned over the next five years, which SANDAG estimates will cost between $170 million and $220 million.

SANDAG’s planned capital improvement includes myriad highway, transit and environmental projects — new carpool lanes, “soundwalls” to block freeway noise, bus facilities, railway “double tracking” to increase train capacity, habitat restoration and monitoring, and more.

“The current market … provides a very favorable environment for borrowing,” with interest rates slashed to buoy the economy during COVID-19, according to a SANDAG staff memo. “Investors have been flocking to safe investment options such [as] municipal bonds in the wake of the COVID-19 pandemic and uncertainty in economic recovery.”

Current estimates suggest $85 million in new bonds could yield a $29 million premium — what investors are willing to pay over face value for safety or higher rates than prevail in the market — for total proceeds to SANDAG of $114 million.

Debt service through 2048, or the total cost to taxpayers including interest, would weigh in at $162 million.

“We’re fairly confident that, even with the new issuance, we’ll be able to maintain our AAA ratings that we have with both S&P and Fitch,” SANDAG CFO Andre Douzdjian told board members Friday.

In addition to generating new money for projects, up to $175 million of new bonds would refinance existing debt issued in 2014.

Replacing old debt with new debt on better terms would save taxpayers an estimated $20 million over two decades, with the largest annual savings occurring between 2022 and 2024.

In addition, last week SANDAG refinanced a federal loan under the Transportation Infrastructure Finance and Innovation Act for savings of $123 million, Douzdjian said.

The board will also consider issuing short-term debt at a rate of barely half-a-percent, in order to delay drawing from the higher-interest federal loan. Using cheaper short-term debt to defer more expensive long-term debt in this manner will save SANDAG another $11 million.

SANDAG’s total outstanding long-term debt currently weighs in at $2.3 billion.

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