[Archived] City of Alexandria Sells General Obligation Bonds for Public Facilities

News Highlights:

• Alexandria issued $72.3 million in general obligation bonds through a combination of short-term tax exempt bonds and taxable Build America bonds
• City’s top AAA/Aaa Bond ratings reaffirmed

The City of Alexandria competitively bid $72.3 million in AAA/Aaa-rated general obligation bonds at a favorable overall 2.93% true interest cost, which is the lowest rate achieved by the City in many years. This interest rate is even lower than last year’s rate of 3.28%.

The City of Alexandria once again utilized the federal Build America Bond program for a portion of the bond sale, for which the federal government provides a 35% interest rate subsidy. This year, however, the City did not determine how many Build America Bonds would be available to bondholders, but instead allowed bidders to make their own determination between Build America Bonds and tax-exempt bonds, based on the bond maturity schedule. The bond sale drew 10 bidders, with the lowest bid submitted by Wells Fargo Bank. The winning bid included $17 million for shorter-term traditional tax- exempt bonds, and $55.3 million in taxable Build America Bonds. The 2.93% true interest cost is calculated after taking into consideration the $12.4 million the City will receive over 20 years from the federal government as a subsidy of interest costs for the taxable Build America bonds.

The $72.3 million bonds will be used to finance certain capital improvement projects including public school facility improvement; construction of the police headquarters building; contributions to the DASH bus system and Metro bus and rail system; and streets, sewers and other infrastructure costs.

Alexandria Mayor William D. Euille said, "This positive news reflects Alexandria's strong leadership and solid financial decision making, even during these challenging economic times. Alexandria has a proven financial reputation, and these bond ratings and favorable interest rate save us money and strengthen our future fiscal outlook."

Standard & Poor’s (S&P) and Moody’s Investors Service reaffirmed the City’s bond ratings of AAA and Aaa, respectively. In reaffirming the City’s Aaa bond rating, Moody’s Investors Service noted that “the city's financial management practices are strong, well embedded, and likely sustainable.” S&P agreed, stating, “the city's financial position in our opinion remains strong despite slower revenue growth.”