Refunding transaction helps address the State’s budget challenges

WILMINGTON, Del. – The State of Delaware today announced the successful refunding of $33 million of debt at a record low Total Interest Cost of 0.79%. The transaction will save the State $5.2 million in debt service on a net present value basis over the next decade and is structured to further help the State address the Fiscal Year 2021 budget challenges brought on by the COVID-19 emergency.

Three bond rating agencies reaffirmed Delaware’s Triple A rating – Fitch, Moody’s and KRBA – with each taking note of the work of Governor John Carney and the Delaware General Assembly in recent years to boost reserves to prepare for economic downturns. J.P. Morgan Securities LLC served as senior managing underwriter for the transaction.

View rating agencies’ credit reports.

“Delaware continues to receive high marks for fiscal management which allows us to sustain the important investments we’ve made in our schools, our communities and our economy, including efforts to address the impacts of COVID-19,” said Governor John Carney. “The COVID-19 emergency presents enormous financial challenges for every state including Delaware. But I think all Delawareans can be proud of the work we’ve done with the General Assembly to boost the State’s finances prior to this unanticipated event, so our State is better prepared to weather the storm.” 

“This successful transaction shows the market’s confidence in Delaware despite the near-term challenges faced by every state,” said Secretary of Finance Rick Geisenberger. “The competitive pricing and debt service savings achieved for Delaware’s taxpayers speak volumes about our State’s continuing financial strengths.”

“The reaffirmation of the State’s Triple-A bond rating is a huge vote of confidence during these uncertain economic times,” said State Treasurer Colleen Davis. “The State’s best practices including using one-time revenue for one-time expenses, and increasing our reserves, will go a long way to see that we emerge from this crisis maintaining our economic strength.”

KRBA views the financial position of the State as “very strong based on its conservative budgeting policies, comprehensive and timely process of revenue estimation, high levels of financial reserves and strong liquidity. In response to the economic impacts of pandemic, the State has constrained its FY2020 spending and projected expenditures are under budget.”

Moody’s noted that “Delaware’s Aaa rating is supported by its healthy and stable finances and its strong management and governance, all of which enhance the state’s capacity to weather the economic downturn caused by the coronavirus outbreak. The state’s recent growth in reserves provide a cushion in the currently challenged economic environment brought on by the coronavirus pandemic.”

Fitch also noted that “Delaware’s history of exceptional financial resilience and strong budget management may be tested by the depth and duration of this downturn. However, Delaware’s close tracking of both revenues and expenditures and frequent revenue forecasts updates have historically allowed it to quickly respond to changing economic conditions. Fitch anticipates the state will take appropriate action to maintain balance.” 

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Bond refunding saves taxpayers $15 million

WILMINGTON, Del. – Delaware’s proactive fiscal management has been recognized with the announcement of the State’s triple-A bond ratings and an upgrade of the rating for Delaware Transportation Authority (DTA) bonds. The State’s ratings were issued in advance of the refunding of $123 million of Series 2009D Build America Bonds that will save Delaware taxpayers more than $15 million over the next decade. DTA’s ratings were issued as the Authority priced $138 million of new Series 2019 Transportation System Senior Revenue Bonds. Bond ratings reflect an issuer’s financial management policies and practices, ability to make future debt service payments, and economic strength, stability and diversity. Both the State and DTA’s bond issues were priced at interest rates that will result in historically low costs for Delaware taxpayers. 

“Delawareans expect us to responsibly manage taxpayer dollars, and that’s exactly what we’re doing,” said Governor John Carney. “We have an ongoing commitment to ensuring that our fiscal house is in order. These important bond issues and our excellent bond ratings will save us money, and help finance important infrastructure projects like schools and roadway projects all across our state.”

The State’s August refunding refinanced $123 million of outstanding debt through a competitive bid process resulting in a 1.12% all-in borrowing cost — the lowest in modern state history for debt of a similar maturity. The State general fund will realize savings of $1.12 million in the current fiscal year alone. The original bonds financed numerous capital projects including schools, libraries, and other state infrastructure projects.  

“The State’s very successful refinancing reflects a team effort by the Carney Administration, the General Assembly, and our financial and legal advisors,” said Secretary of Finance Rick Geisenberger. “Delaware’s premier bond rating reflects many years of prudent fiscal management and recent efforts to limit operating budget growth, boost reserves during good times, and steer one-time revenues to one-time projects. Our goal continues to be preserving the State’s financial flexibility while ensuring that public borrowing is done responsibly and affordably.”

DTA priced its $138 million of new bonds at a competitive all-in rate of 2.11%. This rate followed the announcement that DTA’s bond rating was upgraded by Moody’s Investor Services from Aa2 to Aa1 while Standard & Poor’s reaffirmed its AA+ rating. Moody’s also upgraded the Authority’s outstanding US 301 Project Revenue Bonds Series 2015 from A1 to Aa3 and its Transportation Infrastructure Finance and Innovation Act (TIFIA) Series 2015 Bonds from A2 to Aa3. The Delaware Department of Transportation’s steady reduction in its overall debt combined with continued positive trends in toll, DMV and motor fuel revenues helps lower the cost of capital and frees up funding to further maintain and improve transportation infrastructure throughout Delaware.    

“We are very pleased with the rating services’ upgrade, and having a strong rating enables the Department to get the most out of every taxpayer dollar,” said Secretary of Transportation Jennifer Cohan. “DelDOT is excited to continue delivering on Delaware’s largest Capital Transportation Program in its history.”

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Proposals from county and municipal governments due by April 1

DOVER – The Delaware Department of Natural Resources and Environmental Control’s Environmental Finance and the Department of Health & Social Services Division of Public Health State Revolving Fund programs are now accepting applications from county and municipal governments for the Wastewater and Drinking Water Asset Management Incentive Programs. Applications must be received by both agencies’ close of business (4:30 p.m.) Monday, April 1.

An asset management incentive program is a tool that helps local governments prioritize and classify assets associated with managing and operating a wastewater or drinking water utility. The program results in more efficient management of public utilities, lower replacement costs, and an overall healthier community.

Asset Management Incentive Program participants can receive funding to develop and implement asset management plans for their facilities. To receive financial incentives, municipal governments must sign a five-year agreement with DNREC and DHSS, which requires the development and implementation of system-wide asset management plans for wastewater and/or drinking water utilities. The plan must be consistent with EPA’s Framework for Asset Management, which includes: 1) Current state of assets, 2) Level of service, 3) Critical assets, 4) Minimum lifecycle cost, and 5) Long-term funding plan.

Financial incentives for the program include:

• Up to a $100,000 grant (no match required) per municipality/county in Delaware to develop and implement an Asset Management Program (up to $200,000 for combined wastewater and drinking water programs)
• Loan interest rebate of up to one-half of the interest paid on a new wastewater and/or drinking water state revolving fund loan. Loans will be rebated back for up to five years after completion of projects (from loan amortization start dates).

The program will be funded from the respective non-federal administrative accounts for the Clean Water State Revolving Fund and Drinking Water State Revolving Fund Programs. Submittals will be recommended for funding by the Delaware Water Infrastructure Advisory Council through a first-come, first-served basis, based on receipt of an approved application meeting all of the requirements.

Asset Management Plan guidelines and the application can be found online at the Environmental Finance website. Application must be submitted by email to Greg.Pope@delaware.gov (Proposals submitted by email must be less than 10 MB).

For more information, contact Greg Pope, DNREC Environmental Finance, at 302-739-9941, or Heather Warren, Office of Drinking Water, at 302-744-4817.

Contact: Joanna Wilson, DNREC Public Affairs, 302-739-9902.

Vol. 49, No. 50

Public workshops set for Nov. 14 and 15 on CEPF grant process and environmental project funding program

DOVER – Department of Natural Resources and Environmental Control Secretary Shawn M. Garvin today announced the availability of Community Environmental Project Fund (CEPF) applications administered by the Department. The CEPF grant program was created in 2004 by House Bill 192, as legislation that enables DNREC to withhold 25 percent of all civil or administrative penalties collected by the Department as CEPF funds.

HB 192 requires that CEPF funds benefit communities where civil or administrative violations occurred, and provides for the restoration of these affected communities by funding environmental projects that:

• Reduce pollution.
• Enhance natural resources.
• Enhance natural resources for the purposes of creating recreational opportunities for the citizens of Delaware.

IRS tax-exempt organizations are eligible for CEPF grants of up to $20,000. Applications for the CEPF grants can be found on the DNREC website, or can be obtained by calling James Brunswick, DNREC community ombudsman, at 302-739-9040. The CEPF grant application deadline is Friday, Jan. 4, 2019 by DNREC’s close of business (4:30 p.m.)

DNREC will hold two public workshops Nov. 14 and 15 on the CEPF grant-funding program, scheduled as follows:

• New Castle County: Wednesday, Nov. 14, 7-7:30 p.m., at DNREC’s Lukens Drive offices (Conference Room A, 391 Lukens Drive, New Castle, DE 19720)
• Kent and Sussex Counties: Thursday, Nov. 15, 7-7:30 p.m. DNREC Auditorium, Richardson & Robbins Building, 89 Kings Highway, Dover DE 19901

Pre-registration is requested, but not required. Please email Lisa Myura or call 302-855-1915 to pre-register.

For an application form, and more information on the CEPF grant program, please visit the Community Environmental Project Fund web page.

VIDEO: Full-scale sports gaming launches in Delaware

At 1:30 p.m. on Tuesday, June 5, Delaware launched a full-scale sports gaming operation at all three casinos in the state – Delaware Park, Dover Downs Hotel & Casino, and Harrington Raceway & Casino. Betting offered Tuesday included single-game and championship wagering on professional baseball, football, hockey, basketball, soccer, golf, and auto racing.

The Delaware Department of Finance, in consultation with the Attorney General’s Office, has determined that there are no legal obstacles to moving forward with full-scale sports betting in Delaware following the U.S. Supreme Court decision on May 14 to overturn the Professional and Amateur Sports Protection Act. Under state law passed in 2009, Delaware may authorize betting on professional and collegiate sports, with the exception of games involving Delaware-based teams.

To prepare and educate new consumers, the Delaware Lottery has published an online “how-to-bet guide” for SportsPick, the Delaware sports gaming product.

Governor Carney’s Remarks