High bond rating means lower tax rate, more money for natural areas and Oregon Zoo
Finance staffers at Metro were primed for good news when two credit rating agencies gave the regional government high scores earlier this month.
They didn't know, though, that those credit ratings would result in a very favorable loan for the region's taxpayers. But that's what Metro got after its sales of bonds for natural areas and the Oregon Zoo.
Metro sold $140 million in bonds, and got a $25 million premium for those bonds, meaning the buyers are slated to give the regional government $165 million next month. Metro will then pay back the debt – $140 million – at 2.27 percent interest before 2028.
If the bonds are paid back on schedule, they'd accrue $57.2 million in interest, for a total bill of $197.2 million.
The bottom line for the region's taxpayers is that Metro won't approach the property tax rates voters approved when they passed the natural areas bond measure in 2006 and the zoo bond measure in 2008. Those caps are $0.19 and $0.09 per $1,000 in assessed value, respectively.
Metro finance director Margo Norton doesn't know exactly what the property tax rate will be for the coming fiscal year – that will be hammered out in the coming weeks. But she estimated that the natural areas portion would be $0.12 and the zoo component $0.06 per $1,000 of assessed valuation.
"It's a good deal," Norton said.
Part of the savings were a matter of luck – the day before the bond sale, markets were trending toward higher-risk, higher-yield investments; the ongoing financial trouble in Europe pushed the markets back toward safer, lower-yield investments on the day of the sale.
"Our financial advisors say that we probably picked up 10 basis (interest) points in our favor by selling Wednesday instead of Tuesday," Norton said.
Metro is set to vote in late June on its budget for the upcoming fiscal year. The regional government has bought more than 4,000 acres in 80 transactions since the 2006 passage of the natural areas bond measure.