ANCHORAGE, ALASKA – On August 6, 2020, the Municipality of Anchorage sold general obligation bonds to raise new money for voter-authorized capital projects and to refinance outstanding debt. By taking advantage of low interest rates, the refunding bonds achieved a savings to taxpayers of over $18 million over the next fifteen years.
The Municipality's bond issue consisted of $124 million of bonds from voter-approved debt for capital projects for Anchorage ($52 million for general government and $72 million for the Anchorage School District). Funds for capital projects include roads and drainage, parks and recreation, and police and fire protection services. Anchorage School Bonds provided funds for Anchorage School District capital improvements, including damage repair caused by the November 30, 2018 7.1 Magnitude Point Mackenzie Earthquake. The new money bonds have a total cost of funds of 1.76%. Rates have not been this low since 2010 when the cost of funds was 1.74%.
“This successful bond sale demonstrates high investor confidence in the strength and stability of Anchorage's finances. Disciplined and prudent fiscal management continues to provide measurable benefits to the Municipality," said Mayor Ethan Berkowitz.
The savings achieved by the refunding bonds is $9.4 million for municipal general government and $8.9 million for the Anchorage School District. The Municipality's Public Finance Division took advantage of a rare interest rate opportunity and used taxable bonds to refinance outstanding tax-exempt bonds, resulting in material savings. The interest expense on the debt issued for the taxable bonds was 1.47%.
“The Municipality's general obligation bond rating continues to be AAA by Standard & Poor's and AA+ by Fitch. Our strong financial standing resulted in an average annual savings to taxpayers of over $1.2 million per year for the next fifteen years in future debt service," said Chief Fiscal Officer Alex Slivka. “Our timing of the sale was very good as tax-exempt municipal rates are at least 0.64% lower for a twenty-year bond compared to eleven months ago."
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Media contact: Carolyn Hall, Communications Director, Office of the Mayor, (907) 343-7103, carolyn.hall@anchorageak.gov