Half Moon Bay Plans to Pay Off Bond Debt Ahead of Schedule

The City of Half Moon Bay issued a press release today stating that the City has completed a multi-step process that will result in paying off bond debt by 2019 — more than a decade ahead of schedule.

The bond reduction program is the result of the City Council’s decision in April to apply the $13.15 million of ICW insurance proceeds from the Beachwood litigation toward the Judgment Obligation Bond debt. This action will save an estimated $12 million in debt service payments over the life of the bonds. 

“Knowing that the $13.15 million in insurance proceeds has been placed into irrevocable escrow to be used strictly for the purpose of paying down Half Moon Bay’s bond debt is quite reassuring,” stated Mayor Rick Kowalczyk in a prepared press release. “ In addition to paying off the debt much earlier than anticipated, our annual savings can be applied toward important needs within our community − which is tremendous news for Half Moon Bay.”

Critical components of the bond reduction program were the development of an escrow agreement with U.S. Bank that establishes an irrevocable trust that will be used to redeem the bonds in a way that is most financially beneficial, and bidding for securities that will provide secure investment income to apply toward the bond redemption.

The $13.15 million does not pay off all of the bonds on their respective call dates, but all bonds will be paid off by 2019.