(Washington, DC) - Chief Financial Officer Natwar M. Gandhi today announced the sale of $630.9 million in long term bonds, at 3.43 percent interest rate. This is the lowest interest rate ever recorded for District long term bonds.
The sale included $501.3 million of Build America Bonds (BABs), and $129.6 million of tax-exempt bonds. All of the bonds are backed by District income tax revenues.
Gandhi said, "Once again the investment community has endorsed the District’s sound economic policies and fiscal policies and strong debt security provided by income tax revenues. At this interest rate, the District will save some $40 million over the next four years.
"To put this in perspective, these funds could pay for the renovation of an elementary school or buy 33 fire engines, 16 fire department ladder trucks and 40 ambulances," Gandhi said.
District of Columbia Council Chairman Vincent Gray said, "The Council of the District of Columbia is gratified that the Income Tax Bond program is meeting such strong and broad acceptance among investors. "I congratulate Dr. Gandhi and his team for their creative use of income tax backed bonds. The benefit to District residents is that we will be paying less in debt service for the next 25 years – as much as $40 million in savings over the next four fiscal years – which will help reduce budget pressures," Gray added.
Committee on Finance and Revenue Chairman Jack Evans said, "I am very grateful for the hard work of the CFO and the very positive reception these bonds have received in the market. It truly is a testament to the financial soundness of the District, which is particularly significant in these tough economic times."
Part of the federal stimulus package, the Build America Bond program allows eligible states and local governments to sell taxable bonds and then receive a subsidy from the federal government for 35 percent of the interest cost. This makes the cost lower than traditional tax-exempt bonds, especially in the bonds that mature in later years.
The bonds will be used to pay for capital projects in the District's Capital Improvements Program, including public schools, information technology infrastructure, municipal buildings, mass transit and equipment purchases.
Information about the bond offering is found at www.buyDCbonds.com.