$128,625,000 Utility Systems Revenue Bonds
( $91,325,000 Series 2020A / $37,300,000 Subordinate Series 2020B )
Mountain House Community Services District (MHCSD) is a master planned community in Northwestern San Joaquin County. As residential and commercial developers build out the community, vital infrastructure is installed and/or oversized to accommodate future, planned growth – which is then acquired by MHCSD on credit. Over the years, this approach has led to a large of amount of variable rate debt on MHCSD’s balance sheet.
Kosmont Transactions Services, Inc. (KTS) was instrumental in reshaping the way MHCSD repays its infrastructure debt. KTS devised enhanced security features to address MHCSD’s core security pledges which are “non-standard” compared to what rating agencies are accustomed to seeing. This prior non-standard security structure led to a significant rating downgrade. MHCSD engaged KTS to assist with its next bond issue. KTS successfully devised enhanced security pledges that saved the District millions of dollars in financing costs. The improved security pledge earned the District’s bonds a rating upgrade and also qualified for them municipal bond insurance, garnering even lower rates. A new, custom-tailored additional bonds test allowed for the issuance of a far greater amount of revenue bonds than previously anticipated which in turn enabled the refinancing of even more of the outstanding developer debt with fixed rate, fully amortizing revenue bonds that captured currently very low interest rates.
KTS took the time and made the effort to educate ourselves about MHCDS’s operational model in order to devise an enhanced security and financing structure that resulted in higher bond ratings, lower interest rates, and greater bond proceeds, exceeding the District’s goals and objectives.