RICHMOND, Va. (WWBT) - Based on a competitive bidding process, Richmond will close on its $103.5 million tax-exempt General Obligation (GO) Bonds, Series 2020A in order to issue new debt for city and schools projects, and its $51.6 million taxable Series 2020B bonds to refund existing debt service for interest rate savings.
Through the tax-exempt bonds, the city will save more than $41 million in interest payments over the next 20 years.
“The overall true interest cost of funds for the city’s 2020A Bonds was approximately 1.42 percent, which is the lowest cost of long-term GO bonds for city and schools projects in the city’s history, other than federally-subsidized Build America bonds issued many years ago,” a release said.
The bond sales come after the city’s administration meth with three credit rating agencies.
“In terms of funding for the recently completed three new schools, $60 million (the remainder of the $150 million plan for Richmond Public Schools) is now locked in for 20 years. That portion will be paid off in 2041, rather than in 2046, per previous projections that also presumed a 5 percent long term rate. To provide some context for cost avoidance, debt service for $60 million over 20 years is $26.2 million less at the 1.42 percent interest rate, compared to 5 percent. This cost avoidance will alleviate long term pressure on the 1.5 percent meals tax levy that has been dedicated to fund the three new schools and has been negatively impacted by COVID-19,” a release said.
The refunding components of the bonds will save over $5 million in debt service over the next 15 years.
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