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Unexpected Windfall to Lower Tax Bills

More than 720 Laguna Beach residents will see a decrease of $167 to $299 on ensuing annual property tax bills due to low interest rates on a newly issued city bond.

In total, $877,000 will be saved as a result of refinancing bonds initially issued to pay for undergrounding utility lines and poles in seven assessment districts around the city, City Treasurer Laura Parisi said last week.

The savings will be reflected on 2012/13 property tax bills, typically issued in October.

In December, when Parisi sought the council’s approval for the bond sale, she forecast a $55 per parcel annual savings. But interest rates continued to decline in the interim, she said, and were ultimately sold based on the two-year U.S. Treasury note benchmark of .2 percent interest.

As a measure of the savings, when Parisi took office 12 years ago the same type of notes yielded 6 percent interest.

Besides taking advantage of historic low interest rates, Laguna’s municipal bonds were made available directly to Laguna Beach residents for the first time. About $500,000 of the $3.2 million issue was sold locally, Parisi said. “It’s a safe harbor of a town they know,” she said of investors’ interest in the issue.

Most of the bond issue sold in under two hours; 60% at retail and 40% in wholesale markets, according to the city manager’s report. The bonds funded on Feb. 16.

Districts 95-6, 94-3, 94-1, 99-1, 99-2, 06-2, 07-2 will benefit from the refinancing.  Maturity dates of original bonds in the districts ranged from 2012 to 2024, reflecting when the homeowner-organized assessment districts won approval and obtained bond financing.

 

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