District financial rating soars to new high
Information provided by the Castle Pines North Metro District
The state of the Castle Pines North Metropolitan District from nearly 20 years ago to today could not be more opposite than the North and South Poles.
During the early ninety’s, Castle Pines North was suffering through an economic slow down and its impact on the community was severe. Coupled with high debt and insufficient revenues, CPNMD was unable to meet its debt service requirements and was forced to go through bankruptcy proceedings. Today, the CPNMD has attained the distinction of a AA rating by Standard and Poor’s.
This past year, the economy on both the national and local levels has been faced with greater hardships than have been experienced in the past. And while our own national government and many local agencies are facing difficult economic challenges, it is refreshing and reassuring to know that CPNMD is financially solid.
In 1994, the District was responsible for the payment of nearly $60 million in bonds. Today, that level of debt is $23.5 million.
This aggressive prepayment of historical debt has enabled CPNMD to be rated AA on their 2006 A & B General Obligation Bonds.
This is one of the highest ratings awarded by Standard and Poor’s, an international provider of independent credit ratings, indices, risk evaluation, investment research and data. It issues credit ratings for the debt of public and private corporations, and governments, and is accredited by the U.S. Securities and Exchange Commission.
Standard and Poor’s views CPNMD as having a stable financial outlook reflected by the District’s “track record of strong financial performance, characterized by high reserves and internally generated funds to support ongoing capital needs.”
What Makes CPNMD So Strong Today?
The AA rating places CPNMD in a position to not only be eligible for lower interest rates on future loans, but also be a highly qualified applicant for funds available for borrowing from highly regarded financial institutions.
What Does This Mean For Our Customers?
If the District continues to prepay its debt at this rate, the 2006 C bonds may be paid off in 2012-2013. This will eliminate the District’s exposure to the volatility of variable interest rate general obligation debt. The remaining general obligation debt will be the 2006 A & B bonds, which are fixed rate instruments. It is estimated that all general obligation debt will be eliminated by 2018.
This in turn will lead to the eventual elimination of the taxes received from the 24 mills, which are used to satisfy the interest and principle of the general obligation bonds, as approved and authorized by residents of Colorado in accordance with the Colorado Taxpayer Bill of Rights (TABOR) amendment. The taxes received from the 24 mills can only be used to pay for the existing debt service requirements of the 2006 general obligation bonds. Those funds cannot be transferred for any other uses.
Contact Dan Schmick, Assistant District Manager, at 303-688-8550 with any questions.