How the selling of LTCC bonds show what the nation thinks of Lake Tahoe
Submitted by paula on Fri, 08/14/2015 - 7:57pm
After the passing of the $55 million Lake Tahoe Community College General Bond, known as Measure F in November, the next step was to sell the bonds.
On August 6, 2015, $19 million of Series A bonds were sold at a much better rate than anyone expected. When the market opened at 7 a.m. PST, investors were ready to jump on these bonds and it only took two hours to sell them, and waiting in the wings were another $54.4 million in orders.
The biggest single investor was State Farm Insurance who bought about 25% of the bonds or, $4.7 million.
"We did better than we thought we would," LTCC Vice President of Administrative Services Jeff DeFranco told South Tahoe Now. "Their success reflects not only on LTCC but on the community of South Lake Tahoe."
The action of the normally conservative investor State Farm tells a much bigger story than just some financial jargon.
"Investors see the South Shore as growing and prosperous, " said DeFranco. "There are strong economic indicators."
He and LTCC President Kindred Murillo went to San Francisco with a story of prosperity and investment to tell as they received their quality bond ratings prior to the sale. S&P gave them an AA rating while Moody's gave LTCC an A1. Because of these high ratings (and the resulting demand to buy the bonds) they were able to sell the bonds with an interest rate of 3.957%.
Investors wanted to know about South Lake Tahoe and the surrounding region. Murillo and DeFranco presented a packet that included the investments on such projects as Heavenly Village, the Chateau, Hard Rock Casino, Lake Tahoe Wildlife Care's new home, the overall infrastructure of roads and government investment on keeping Tahoe blue. They told the story of a new vitality in the region and a strong economy.
Tahoe has a very strong brand name, and it showed with the interest in the sale of the bonds.
What also helped was the fact that the college had never had a bond sale before, so it was a new way for investors to get a bit of Tahoe into their portfolios. The assessed valuation of the LTCC District is $6 billion, so there is strong backing on the bonds.
Part of the bond money went to retiring the $1,274,385 worth of Lease Revenue Bonds used in 2006 for the new library. Those were are a 5.5% interest rate.
Another bonus was the fact that the college is financially stable. They have a written policy of keeping 10% in reserves, something that other colleges may have but without it being policy.
The community is who pays back the bonds, so the team at LTCC made it easier with their strong bond rating and interest rate.
The first series of bonds will start the long list of projects that were outlined in Measure F. Already started is the replacement of the 40-year-old boilers so students won't have to be stuck in cold classrooms as was the case more than once last year. The new One Stop Enrollment Services are almost ready to open, giving students only one place to go in order to enroll in classes instead of a string of offices they once had to visit. The technology upgrade is also underway as they are expanding wireless on campus and upgrades of servers to assist professors with their classroom presentations.
This influx of $19 million will until August of 2016 and then the college will sell the next series of bonds. They will only sell bonds for monies needed for the next series of projects. It is estimated that there will be another three or four bond sales until the full $55 million is used.
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