Pittsburgh reaps $80 million for projects from bond sale
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Pittsburgh City Council gave final approval today to a bond issue that, one member said, shows both the city's stewardship and its commitment to neighborhood investment.
Council voted unanimously to float about $72 million in new debt and refinance about $43 million in old debt.
The team marketed the bonds Monday. Market conditions were so exceptional, city finance director Scott Kunka said, that some investors were willing to pay more than face value for the bonds.
While floating $72 million in new debt, he said, the city will receive $80 million in sale proceeds. It also will save $4.7 million from the refinancing.
The money will be poured into capital projects ranging from street paving to playground improvements to demolition of abandoned houses.
The 15-year deal will have an annual average interest rate of 3.29 percent, described as the city's lowest rate in about 20 years.
Because of high marks from rating agencies and financial progress the city has made in recent years, officials were not required to purchase bond insurance as a protection for investors, Mr. Kunka said.
"That saves us a little over $1 million in transaction costs," Mr. Kunka said.
In all, the city will pay about $42 million in interests and costs, including $870,000 to lawyers, underwriters and other consultants who worked on the deal. Mr. Kunka and Councilman Bill Peduto said transaction costs usually are much higher.
The borrowing is the first of Mayor Luke Ravenstahl's administration.
It comes after five years during which Mr. Ravenstahl paid off $243 million in old debt and cobbled together a capital program from operating funds. Now, he said, it's time to borrow money and address capital projects that have been deferred too long.
Councilman Ricky Burgess, the finance chairman, said low costs and market interest in the bonds show how far the city, which has been under state financial oversight since 2004, has come.
"I believe this moment is really symbolic of the movement of our city over last four or five years," Mr. Burgess said.
First Published January 31, 2012 12:00 am
