RTD closes financial transaction reducing its annual debt service by more than $144 million over 22 years

RTD closed a financial transaction in late August that refinanced its FasTracks Series 2014 certificates of participation (COPs) with FasTracks bonds to lock in savings of more than $144 million in future interest expense over the next 22 years.

The transaction, authorized by RTD’s Board of Directors at its July 26 meeting, will reduce its annual debt service by a significant amount through interest savings – on average, the net present value of the savings is approximately $6.5 million each year in today’s dollars. This reduction will increase future budgeting flexibility and help RTD continue to deliver valuable public transportation services to the community. The district regularly looks for opportunities to decrease its financial obligations.

“This transaction is a consequential achievement and demonstrates thoughtful stewardship of public funds and fiscal accountability,” RTD General Manager and CEO Debra A. Johnson said. Referencing the agency’s strategic plan, she added: “Our priority of financial success is paramount. We want to optimize the dollars we spend in the most efficient manner possible. With this transaction, we are making the most of taxpayer dollars for the betterment of the agency.”

The 2014 COPs were initially issued to provide part of the funding to build RTD’s newest commuter rail line, the N Line, which serves Denver, Commerce City, Northglenn and Thornton. These COPs were refinanced with $320.0 million of bond proceeds, proceeds from the 2014 COPs debt service reserves and $93.3 million of RTD cash, including $0.3 million for the cost of issuance.

The refinancing used the approximately $350 million of remaining FasTracks sales tax bond borrowing capacity approved by voters in 2004. RTD used the remaining debt capacity with this transaction to realize significant additional interest savings achieved through issuing bonds rather than COPs and to avoid any expiration of the voter authorization.

Beyond reducing FasTracks’ outstanding debt and debt service, the refinancing also improves RTD’s ability to issue COPs to fund future projects. However, the district has no current plans to issue additional debt and forecasts that ongoing district needs will be funded with cash.