College District’s Bonds Sell Quickly Thanks to Highest Rating From Credit Rating Agencies

The West Valley-Mission Community College District last week sold $150 million in bonds, attracting the interest of several major investors thanks to having recently earned the highest bond rating possible from Standard & Poor’s and Moody’s.

The bonds sold in a matter of hours and included such institutional investors as JP Morgan Bank, State Farm Insurance, Hartford Life Insurance, Northern Trust Company, and Trainer Wortham & Co. Additionally, at the local level, individuals from Saratoga bought $500,000 in bonds and individuals from Cupertino purchased $20,000, said Ed Maduli, WVMCCD vice chancellor of administrative services.

“We were very pleased with the strong response from the financial community to our bond sale,” Maduli said. “The bonds attracted a lot of interest, which is what we wanted. Because of the high quality of the bonds and the good perception investors have of the district, we were able to sell all the bonds very quickly. Such a response demonstrates the strength of our financial position.”

In assigning the college district the AAA rating, the credit rating agencies cited several factors for the increase from the rating of AA, which is two levels below the highest rating. Standard & Poor’s, for example, stated that the rating reflects the district’s recently achieved basic-aid status, participation in the deep and diverse economy of Silicon Valley and the greater San Francisco Bay Area, very strong available general fund balance, financial flexibility provided by operating reserves held outside the general fund and good financial policies and practices.

The bonds the district sold last week are part of the money approved through Measure C, the $350 million bond measure voters overwhelmingly approved in 2012.

Of the $150 million sold, roughly $78 million will go toward the Main Building Replacement Phase II at Mission College. Construction on this new building is set to begin in September. After that is built, the original Main Building will be demolished and a technology building will be constructed at the site. Both of those projects also are funded through this recent bond sale.

At West Valley College, money from the recent bond sale will pay for construction of the new Student Services Center as well as renovation of the Business Division and Administration of Justice building, and renovation of the Learning Resource Center.

The money also will pay for the construction of a new Facilities Building for the district. All of the projects funded through the recent bond sale are set to be completed over the next four years.

In conjunction with the sale of the Measure C bonds, the college district also refunded, or refinanced, at a lower interest rate, about $32 million in bonds that had been issued previously as part of Measure H, the bond measure approved in 2004. The refinancing of those bonds resulted in about $6.6 million worth of savings to taxpayers, Maduli said.

WVMCCD is just one of two community college districts in California to earn the AAA bond rating from the two credit-rating agencies. Of the 72 community college districts in California, the San Mateo County Community College District is the only other district to earn the highest rating.