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GALVESTON, TX (June 23, 2017) – This week, the City of Galveston successfully sold $22.6 million in tax exempt public improvement bonds, to fund projects beginning in July that were promised in the May bond election. Due to favorable market conditions, the sale will raise $25 million for street and drainage improvements across the city. The sale comes six months after Fitch Ratings upgraded the City’s credit rating to AA from AA- based on the City’s steady growth, healthy financial position with substantial reserves and manageable debt burden. The credit rating upgrade earned by the City and favorable market conditions saved taxpayers an estimated $250,000 in savings in interest payments over the life of the bonds. City officials said the credit rating upgrade and the recent passage of the bond measure indicate both public and private support for the city’s initiatives.
“This week’s successful bond sale is a strong, positive sign that Galveston is on the right track,” said Mayor James D Yarbrough. “The progress we have made aligning the city’s finances with the community’s needs has allowed us to take full advantage of our improved credit rating and economic growth. This bond sale will allow us to begin five years of needed infrastructure improvements to the city’s streets and drainage, while maximizing favorable market conditions.”
Mike Loftin, Assistant City Manager for Finance, said the City had significant demand for these bonds given its AA credit ratings. “Thanks to high demand, we had multiple orders to purchase the bonds that were available in some of the later years, which allowed us to reduce the overall interest rate incurred by the City.” Jim Niederle, the City’s Financial Advisor, stated “We had anticipated paying an overall interest rate of between 3.15% and 3.20%, but the strong demand for the City’s bonds allowed us to come in at 3.06%. All in all, a great outcome for the City.”
The sale is the first phase of the City’s general-obligation bonds authorized by voters in the May elections as part of an overall $62 million bond program. The bonds are payable from a portion of the City’s property tax that is earmarked for debt service on outstanding bonds. City Council approved the sale at its June 22, 2017 meeting. The $25 million received by city from the sale of these bonds will fund street and drainage projects including a total of 13 projects outlined in Schedule A.
“The success of this bond sale is further evidence of our intention to fulfill the promises made to the voters prior to the May bond election.” said City Manager Brian Maxwell. “This sale proves that our focus on core mission goals sustain sound financial footing and focus on infrastructure and public safety are being received well. These efforts contributed to the City’s improved credit rating, resulting in a lower interest rate that will save our residents money.”