The San Diego Unified School District won The Bond Buyer's 15th annual Deal of the Year award Thursday night for its $471 million sale which smashed the template for local general obligation bonds in California.
California school bonds were long rated on the strength of school districts' operating budgets, even though the special property taxes that repay the GOs aren't part of those budgets. San Diego USD and its deal team worked to convince rating agencies and investors to evaluate its GO bonds based on the dedicated taxes that support them. They sought a special legal opinion to support that paradigm shift, along with state legislation declaring local GO debt to be subject to a statutory lien. This resulted in rating upgrades that helped the deal's spreads tighten by between 18 and 37 basis points from the San Diego district's sale five months earlier.
"Our choice is a deal that has caused a sea change in a type of bond that accounts for a quarter of the issuance in the nation's largest market, a transformation that could save taxpayers billions of dollars," said Michael Scarchilli, Editor in Chief of The Bond Buyer, at the Dec. 1 gala. "In addition, this year's honored deal introduced a model that has already been taken advantage of by nearly two dozen other issuers."
For 15 years, the editors of The Bond Buyer have selected outstanding municipal bond transactions for recognition. The 2016 awards, which were distributed at a ceremony at 583 Park Avenue in Manhattan, drew nominations that represent the diverse range of communities and public purposes served by the municipal finance market.
The other finalists were:
The New York Transportation Development Corp.'s public-private partnership to help fund a $4 billion redevelopment of LaGuardia Airport. At $2.4 billion, it is the largest U.S. P3 to date, the largest airport transaction in history, and the largest alternative minimum tax transaction ever brought to market.
The Texas Water Development Board's $810 million sale of State Water Implementation Revenue Fund for Texas (SWIRFT) revenue bonds. The projects funded in this transaction will produce more than 1.5 million acre-feet of water, helping ensure the vitality of the Texas economy, rain or shine.
Ohio State University's $600 million sale of general receipts bonds. The university's use of a corporate-like shelf registration – believed to be a first in the municipal market – established a base offering statement, streamlining the state flagship university's market access by allowing it to move quickly on deals.
The Health and Educational Facilities Board of The Metropolitan Government of Nashville and Davidson County, Tenn.'s $1.13 billion bond sale on behalf of Vanderbilt University Medical Center. Proceeds were used to purchase the medical center's assets from the university and create legal and financial separation of the two entities.
The District of Columbia Water and Sewer Authority's $25 million issuance of the nation's first Environmental Impact Bonds. The net proceeds of the sale will finance the inaugural project in DC Water's green infrastructure program, engineered to manage stormwater runoff and improve water quality in the District.
The Illinois Finance Authority's $1 billion issue on behalf of Presence Health Network. The sale marked the largest high-yield not-for-profit healthcare deal in recent memory and generated significant savings that can be reinvested into services while providing some breathing room for Presence's turnaround plan to achieve results.
SMALL ISSUER FINANCING
The Northwest Dallas County Flood Control District's $15.7 million sale of unlimited tax refunding bonds to defease bonds issued in a 1992 debt restructuring and lift a tax-rate cap. The new bonds gave the district until 2045 to pay off the debt, 20 years later than the previous maturity.
For the sixth year, the Deal of the Year gala also included the presentation of the Freda Johnson Award for Trailblazing Women in Public Finance. This year marked the third in which the organization has honored two public finance professionals; one from the public sector and one from the private. The 2016 honorees were president of Finance & Development at New York State Homes & Community Renewal Marian Zucker, and Siebert Cisneros Shank & Co. chairwoman and CEO Suzanne Shank.