Public Information & Communications
For Release: March 29, 2012
Contact: Steven Wright
Director of Public Information & Communications
480-644-2069 Tel
480-258-4762 Cel
steven.wright@mesaaz.gov
City of Mesa nets more than $72 million in savings with debt restructuring
The Mesa City Council was presented today with the results of a bond refunding strategy they approved this past January that resulted in the City saving an estimated $72.1 million over the next five years in debt service payments. The savings came about from a two-pronged refunding mechanism City staff had been planning and anticipating for almost two-years.
City Manager Chris Brady reported that in one process the City’s financial staff, working with bond counsel, had converted interest on a series of tax exempt bond issuances from between 4 and 5 percent to between 1.73 and 2.1 percent on the City’s general obligation (GO) bonds, utility system revenue (USR) bonds and street & highway user revenue (HURF) bonds. The first year savings taken in Fiscal Year 2011-12 will be approximately $9.6 million.
“We were able to take advantage of some long-term planning and the current market to exceed the savings estimates presented to Council in January,” Brady said. “The timing was right and Mesa’s reputation was received well in the market.”
Savings for the general fund, which provides services such as police, fire and parks, is expected to be $2.1 million while the anticipated savings for the utilities enterprises fund for energy and water is more $3.89 million. The street fund, which receives revenues from the HURF bonds, is looking at an infusion of $3.56 million for street maintenance and repair.
“This is incredible news,” District 2 Councilmember and Council Audit and Finance Committee Chair Alex Finter said. “As a Committee and Council we agreed with the approach presented by City staff earlier this year as being strategic and with merit. The results are well-deserved.”
The City’s strategy also included a second refunding process involving the restructuring of the debt service related to taxable utility systems bonds where the long-term results through 2017 will total more than $61.5 million in savings or almost $12 million annually beginning in 2013. Current year saving will be nearly $1 million.
“It is this type of forethought, planning and financial strategy that has kept this organization’s bond rating consistently high and improving even during the past three years of economic decline,” Mayor Scott Smith said. “Staff has not only been aggressive in reinventing how we provide our services and products to our customers in more efficient and sustainable ways but has also saved the City tens of millions of dollars over the same period using sound financial practices and trend forecasting. I applaud staff’s efforts and the Council for understanding and supporting this strategy early on.”
For more information on the City of Mesa’s budget and finances, go to www.mesaaz.gov/budget.
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