Sale converts December’s variable-rate bonds to fixed
NORTH BAY – The Sonoma Marin Area Rail Transit District announced that it has successfully sold more than $199 million in bonds, securing an overall 3.3 percent interest rate that the agency said will net $171 million to fund construction.
Those bonds will be supported by revenue from Measure Q, the quarter-cent sales tax measure voters in Marin and Sonoma Counties approved to help fund the two-county commuter rail system in 2008. Investors will receive yields ranging from 1 to 3.4 percent, according to the district.
SMART initially marketed $191 million in bonds through a variable interest rate last December, with revenue placed in an escrow account pending the ultimately unsuccessful effort to place a measure to repeal Measure Q before voters this November. With the revenue released, the agency’s board of directors approved that the bonds be converted and sold with a fixed interest rate in March.
Two rating agencies issued their evaluation of the bonds in April, with Fitch Ratings issuing an “A” rating and Standard & Poor’s issuing a “AA” rating.
“The interest in SMART bonds was very high, with participation by over 30 different well-known institutional investors, including between five-to-10 California municipal bond funds,” said SMART General Manager Farhad Mansourian, in a statement.
San Francisco-based Public Finance Management served as the finance advisers. The remarketing team consisted of Barclays, Morgan Stanley and the law firm Orrick, Herrington and Sutcliffe. The disclosure counsel was Fulbright and Jaworski.
“This funding completes the financing that SMART will use to ease traffic congestion, create jobs, improve the business climate and offer a greener way to move around the North Bay,” said SMART Vice Chair and Marin County Supervisor Judy Arnold, in the release.
SMART awarded its first construction contract, at $103 million, to a joint venture of Alameda-based Stacy and Witbeck Inc. and Herzog Contracting Corp. in January, with $17 million going to a number of local subcontractors. That contract entails the underlying construction for the stretch between Santa Rosa and San Rafael, with additional contracts required for the final stretch into downtown San Rafael and other work.
The initial operating segment between Santa Rosa in Sonoma County and San Rafael in Marin is expected to be operating between 2015 and 2016, with a full system spanning the length of both counties planned when funding becomes available.
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