Future Sales
Tax Funding
(Measure J)

In 2004, Contra Costa voters
approved “Measure J,” which
continued the county’s half-cent transportation sales tax for 25 more years. In preparing for the Measure J period, the Authority entered into an agreement to lock in historically low interest rates, and to establish some certainty in project budgets.

On December 6, 2005, the
Authority completed an innovative financing arrangement involving interest rate swaps with Bank of America, N. A. and Merrill Lynch Capital Services, Inc. This innovative financing arrangement enables the Authority to lock in the very favorable fixed interest rate of 3.653 percent for $300 million in bonds expected to be issued in 2009. Ambac Assurance Corporation provided swap insurance, a forward commitment for bond insurance, and a reserve fund surety bond in connection with the financing arrangement.

Including anticipated ongoing fees expected to be associated with the floating rate bonds to be issued in 2009, the synthetic fixed rate is lower than current long-term fixed interest rates for sales tax revenue bonds of comparably high credit quality. The strategy was developed and implemented in cooperation with the Authority’s financial advisor, Public Financial Management, Inc., and the Authority’s bond counsel, Orrick, Herrington & Sutcliffe LLP.

The transaction was done with the assistance of the Authority’s swap advisor, PFM Asset Management, LLC. Representation was by Authority counsel Nossaman, Guthner, Knox & Elliot, LLP.