District leads bond refinancing efforts

LAKEWOOD RANCH — Supervisors on the Lakewood Ranch Community Development District 6 board are taking advantage of low interest rates in an effort to pass off savings to homeowners within their district.

On Monday, the board closed on a deal with Centennial Bank to refinance its 2004A bonds. The refinancing move reduces annual assessments for about half of the homeowners in Country Club West, about 231 properties, between $181 and $360.

Only property owners who make payments on those specific bonds through their annual assessments are affected though.

The district’s original interest rate on the bonds was 6.13%, compared with the new 4.5% rate, which will produce about a $800,000 net present value savings (or actual savings of $1.2 million over the life of the bond), Town Hall Finance Director Steve Zielinski said.

“It’s been a goal to get off the 6.5%,” Supervisor Richard Williams said. “This is one step, and next year we’ll take the next step (and refinance more bonds).”

Lakewood Ranch CDD 4 supervisors now will move forward with a similar deal with Centennial Bank. In CDD 4, the original bonds were issued districtwide, not in phases of development, and the bulk of 1,688 properties have already paid off their debt-service obligations. Only 923 properties will be affected by the refinance, Zielinski said.

The outstanding bond refinance is for $2.22 million. The current interest rate on the bonds is 5.95% compared with 4.5%. Average savings for affected property owners will be $15 to $91 annually.

“Refinancing transactions has been more frequent over the past few years primarily due to the low interest rate environment and the build-out status within the districts,” said Brett Sealy, managing partner for MBS Capital Markets, the company handling the bulk of CDD bond refinances in East County. “The benefit is the reduction in the debt service payments to each of the residents in the districts.”

For example, Heritage Harbour South refinanced its bonds in 2013, shifting from a 6.5% interest rate to a 4.89% interest rate. The change saved $639,353, or up to $125 per unit annually. And Waterlefe’s CDD refinanced bonds in 2012, dropping from a 6.95% interest rate to 4.59%. The change resulted in $490,480 in savings, or up to $156 per unit annually.

Other communities have used refinancing bonds as a mechanism for paying for other district improvements.

In University Place, for example, the district replaced a series 2001A bond with a 2008 bond, refunding the original debt service and financing more money to fund improvements and capital projects, specifically the purchase of land for stormwater management, irrigation system improvements and funding a capital repair and replacement account.

Bond Savings Breakdown
Heritage Harbour South
Series 2013A-1 and A-2 bonds
Original bond issued: Nov. 1, 2002
Original bond amount: $7.72 million
Original interest rate: 6.5%
Refinance amount: $6.58 million
Refinance interest rate: 4.89%
Refinance date: July 19, 2013
Total debt service savings to the district: $1,698,464
Savings breakdown: $639,353 net present value savings representing 9.72%; On average, about 12% annually ($40 to $125 per unit annually)
 
Tara
CDD 1 Series 2012A-1 and A-2 bonds
Original bond issued: Aug. 1, 2000
Original bond amount: $3.64 million
Original interest rate: 7.15%
Refinance amount: $2.64 million
Refinance interest rate: 4.35%
Refinance date: Aug. 29, 2012
Total debt service savings to the district: $1,216,846
Savings breakdown: $471,546 net present value savings representing 17.24%; On average, 22% annual savings ($41 to $77 per unit annually)
 
Waterlefe
CDD Series 2012 bonds
Original bond issued: March 1, 2001
Original bond amount: $4.27 million
Original interest rate: 6.95%
Refinance amount: $3.32 million
Refinance interest rate: 4.59%
Refinance date: June 27, 2012
Total debt service savings to the district: $1,337,528
Savings breakdown: $490,480 net present value savings representing 14.19%; On average, about 20% annually ($72 to $156 per unit annually)
 
GreyHawk Landing
CDD Series 2011 bonds
Original bond issued: May 1, 2002
Original bond amount: $7.13 million
Original interest rate: 7%

Refinance amount: $6.23 million
Refinance interest rate: 5.10%
Refinance date: Nov. 18, 2011
Total debt service savings to the district: $2,136,759
Savings breakdown: $566,614 net present value savings representing 8.93%; On average, about 17% annually ($102 to $174 per unit annually)

University Place
Series 2001A bonds
Original bond issued: Dec. 1, 2001
Original bond amount: $2.82 million
Original interest rate: 7%
Refinance amount: $4.11 million
Refinance interest rate: $2.98 million at 5.11% and $1.14 million at 5.35%
Refinance date: June 24, 2008
Total debt service savings: N/A. Money used to pay for infrastructure.

Contact Pam Eubanks at [email protected].