Bond Rating Upgrade, Build America Bonds Mean Savings for Cudahy Taxpayers
Newly-analyzed numbers show the City of Cudahy will save nearly $500,000 because of its upgraded bond rating earlier this month, as well as the city’s decision to issue Build America Bonds, which were created through the American Recovery and Reinvestment Act of 2009.
Standard & Poor’s increased Cudahy’s rating from “A+” to “AA –“, citing the city’s commitment to maintaining its 25% operating reserve fund, completion of a five-year financial management plan, paying off $1.5 million of its unfunded pension liability, steady tax base growth due to successful redevelopment efforts and proximity to the airport and downtown Milwaukee.
Moody’s Investors Service affirmed Cudahy’s “A2” rating.
In the bond sale on November 17th, Cudahy received an interest rate of 3.22% for $7,250,000 Build America Bonds – a record-low interest rate for the city.
“We could not be more pleased with this interest rate,” said Mayor Ryan McCue. “It means a savings of $50,000 over the life of the bond issue. The Build America Bonds will save Cudahy $448,000, which ultimately means a savings of $498,000 for our taxpayers.”
The Build America Bond Program allows state and local governments to issue taxable bonds for capital projects at lower borrowing costs to stimulate the economy and create jobs. Governments receive a direct federal subsidy payment from the Treasury Department for a portion of their borrowing costs.
Cudahy received a rate of 4.67% for $3,950,000 General Obligation Bonds.
The city bonded for $11.2 million for 2009 and 2010 combined to save administrative costs. The bond will pay for storm and sanitary sewer improvements, Tax Increment Financing (TIF) costs and miscellaneous General Fund Capital Improvement projects.
The city will see savings to all future bond issues while Cudahy maintains its “AA —“rating.
