City of San Antonio strengthens its financial position, saves taxpayers millions of dollars with bond sale and refinancing
'AAA' bond rating reaffirmed for the sixth consecutive year
SAN ANTONIO, July 30, 2015 /PRNewswire-USNewswire/ -- The City of San Antonio has strengthened its financial position after having its 'AAA' general obligation bond rating reaffirmed by the three major bond rating agencies – Standard and Poor's, Fitch and Moody's – for the sixth straight year. Moody's, which had the City on negative outlook last year, revised its outlook to stable, citing "strong financial results guided by an experienced management team." San Antonio is the only major city with a population of more than one million to have a 'AAA' bond rating from any one of the major rating agencies.
"It's important for residents to know that the City has maintained the highest possible credit rating and is completing more than $1 billion in neighborhood projects (through the 2007 and 2012 bond programs) all without increasing the property tax rate," said Mayor Ivy Taylor. "It's no overstatement to say that the City of San Antonio is a shining example when it comes to managing taxpayer dollars."
Taking immediate advantage of the highest possible credit rating, the City sold and refinanced a total of $320 million in bonds, certificates of obligations and tax notes this week at tax-exempt and taxable interest rates of 3.00% and 3.63%, respectively, saving City taxpayers millions of dollars on streets, parks, libraries and other capital projects. The sale included $140 million in bonds from the voter-approved 2012 Bond Program. The City also refinanced existing debt from the 2006 and 2007 obligations for present value savings of $12.9 million. The 'AAA' bond rating allows the City to pay the lowest possible interest rates in the market, which means the City can spend less on interest to repay the debt and more on capital projects.
"The City's credit rating affects every resident of San Antonio," said City Manager Sheryl Sculley. "Outstanding credit translates into lower total costs for the streets, drainage, libraries, parks and other projects that are important to the community. Many other cities would enjoy being in our shoes."
The ongoing contract negotiations between the City and the fire and police labor unions were a consideration in the rating agencies' evaluations. Moody's, in particular, noted that "City officials expect to keep public safety costs at no more than 66% of the General Fund Budget. Officials continue to negotiate with public safety employees, with the expectation of realigning benefits with peer cities in the future." The City has offered a proposed contract to the San Antonio Police Officers Association that includes more than 11% in pay increases over the next four years and has officers contributing to the cost of healthcare for their dependents, while keeping public safety spending within 66% of the General Fund Budget.
The following transactions took place on Monday and Tuesday, July 27-28, 2015:
| TYPE |
AMOUNT |
INTEREST RATE |
PURPOSE |
| General Improvement Bonds |
$140,295,000 |
3.20% |
Projects in voter-approved 2012 Bond Program |
| General Improvement Refunding Bonds |
$94,215,000 |
2.10% |
Refinancing $96,435,000 of outstanding obligations, producing a net present value savings of $12.9 million |
| Certificates of Obligation Tax-Exempt |
$36,360,000 |
3.18% |
Projects approved in the capital budget |
| Certificates of Obligation Taxable |
$43,820,000 |
3.63% |
Alamodome improvements |
| Tax Notes |
$4,780,000 |
.86% |
Street improvements |
| TOTAL |
$319,470,000 |
City on the Rise: San Antonio
San Antonio is a city on the rise for the new face of America—a diverse, progressive and globally competitive city with a solid vision for national and international economic development. The City of San Antonio maintains a strong financial position with a "AAA" general obligation bond rating from all three major rating agencies. In 2014, Forbes labeled San Antonio the "Best City in the Southwest" for adults ages 18-34 for its dynamic economy, employment opportunities and affordable living. As the seventh-largest city in the United States, San Antonio is experiencing solid economic growth in 21st century industries such as bioscience, aerospace, cybersecurity and healthcare, which contribute billions to the local economy. San Antonio has also positioned itself at the forefront of the New Energy Economy in the United States, committed to investing and creating employment opportunities in green industries. San Antonio continues to experience the addition of missions at its several military commands, further fostering a significant relationship spanning more than 200 years. Thirty-one million visitors come to San Antonio every year, generating more than $13.4 billion annually and making the travel industry a vital asset to the city's economic health. For more information, visit www.sanantonio.gov.
Photo - http://photos.prnewswire.com/prnh/20150730/250831
SOURCE City of San Antonio
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