By Holly Walter
The city of Scottsdale has taken advantage of low interest rates and the city’s excellent bond ratings to refinance portions of the city’s debt, saving taxpayers an estimated $24.7 million over the life of the bonds.
The city completed the first portion of this refinancing in December 2020, involving $168.2 million in general obligation bonds. Based on current market conditions, this will achieve a net savings to the city and its taxpayers of more than $13.2 million.
All three major rating agencies – Standard & Poor’s Financial Services, Fitch Ratings and Moody’s Investors Service – recently reaffirmed their highest ratings of AAA for Scottsdale’s General Obligation bonds, which are backed by property tax revenue. The rating agencies cited the city’s diverse local economy and Scottsdale’s record for excellent fiscal management as key reasons for the high bond ratings.
In January, the city refinanced $143.1 million in Municipal Property Corporation bonds with a total all-in interest cost of 1.5 percent – the lowest in the city’s MPC history. This refinancing will result in savings of $11.5 million. The refinanced bonds will mature through 2036 and be repaid with excise tax collections. Savings will benefit both the General Fund ($5.5 million) and the Water and Sewer Enterprise Funds ($6 million).
The Municipal Property Corporation is a nonprofit entity established by the city in 1967 to finance construction of city facilities and acquisition of land for municipal purposes.
In addition to refinancing existing debt, Scottsdale issued $51.2 million in new general obligation bonds to finance projects included in the voter-approved Bond 2019 program. High bond ratings once again proved favorable for the city. Of the $51.2 million issued, $31.4 million was a tax-exempt series with a total all-in interest cost of 1.5 percent. The remaining $19.8 million was a taxable series with a total all-in interest cost of 1.6 percent.
“Given current economic challenges we all experience due to the global pandemic, it was especially important to achieve these savings for Scottsdale taxpayers,” says Mayor David D. Ortega. “Our strong local economy and prudent financial management made it possible. We will continue to manage our finances carefully with an eye on the best outcomes for our residents.”
To learn more about the city’s budget and finances, visit ScottsdaleAZ.gov and search “budget.”