South Texas College announced earlier this month that it had made a refinancing move it expects will save taxpayers over $3.6 million.
The college sold $41 million in limited ad valorem tax refunding bonds on July 1, which are expected to save the college $3.6 million in debt service and result in a tax reduction to the residents in Hidalgo and Starr counties.
Paul R. Rodriguez, STC board chairman, says the board has been monitoring the financial situation for several months.
“The credit environment started changing quite a bit,” he said.
Rodriguez likened the decision to refinancing a home.
“Rates are so low now, it’s just incredible,” he said. “I don’t think we’re going to see rates like this again, certainly not in my lifetime.”
While Rodriguez says the move refinancing move is not uncommon, it is important. He says the savings will be felt by the community gradually.
“We may not see it immediately. Over time we’re going to see these savings,” he said.
According to Rodriguez, the board may make similar moves in the near future.
“We still think that we’ll have some opportunity later in the year for another portion, probably of a similar size,” he said.
A release from the college says the 2020 refunding bonds were rated “AA2” by Moody’s and “AA” Standard & Poor’s, respectively.
“Standard & Poor’s noted that their AA rating reflects our opinion of the College’s deep and diverse property tax base, which benefits from growth spurred by international trade; strong finances with stable overall operations and very strong reserves; and good financial management policies and practices,” the release said.