Mayor Chris Beutler today announced that the West Haymarket Joint Public Agency (JPA) sold the first $100 million in bonds for the new arena at an interest rate of 3.2 percent. The difference between the conservative 5-percent estimate the City used for planning and the actual 3.2-percent rate will result in a savings of about $1.8 million per year during the first 10-year period. Over the 35-year life of the bonds, the savings is $50 million.
"Today's sale is a strong indication that our loan expenses will indeed fall below our projections, in this case far below," said Mayor Beutler. "This also confirms another point we made in the campaign. Interest rates may never be lower. There may never be a better time to build a major municipal project like the arena than now. Good planning and hard work have resulted in millions of dollars in savings to Lincoln taxpayers. We hope this news justifies the faith the public has placed in us as stewards of the public dollar."
The City's bond counsel, Lauren Wismer with Gilmore & Bell P.C., said that outside of Lincoln Electric System bonds, the City has never issued a bond amount this high and never received an interest rate this low for a long-term bond issue.
The bonds are Build America Bonds, which are sold on a taxable basis, with the federal government providing a 35-percent subsidy. The City received six bids from four firms, and the buyer of the bonds was Wells Fargo. The bids are posted online at aicauction.co (click on "results"). The City's financial advisor, Scott Keene from Ameritas Investment Corp., facilitated the transaction.
City Finance Director Don Herz said today's sale "sets a pattern" for the rest of the bond issues. He said the second arena bond sale for $30 million in Economic Recovery Zone bonds will take place later this year. Those bonds have a federal subsidy of 45 percent.
Information on the West Haymarket JPA is available at lincoln.ne.gov (keyword: west haymarket).