Mesa Debt Restructuring to Save Millions

Phoenix Business Journal by Angela Gonzales, Senior Reporter
 

The city of Mesa will save about $72.1 million during the next five years as a result of debt restructuring approved by the Mesa City Council.

The city was able to convert interest on a series of tax-exempt bond issuance from between 4 percent and 5 percent to between 1.73 percent and 2.1 percent. Those are on the city’s general obligation bonds, utility system revenue bonds and street and highway user revenue, or HURF, bonds.

The first-year savings taken in fiscal 2011-12 will be about $9.6 million.

City Manager Chris Brady said these savings exceed the estimates that were presented to the city council in January.

“The timing was right and Mesa’s reputation was received well in the market,” he said.

Savings for the general fund, which provides services such as police, fire and parks maintenance, is expected to be $2.1 million, while the anticipated savings for the utilities enterprises fund for energy and water is more than $3.89 million. The street fund, which receives revenues from the HURF bonds, is looking at an infusion of $3.56 million for street maintenance and repair.

The city’s strategy also included a second refunding process involving the restructuring of the debt service related to taxable utility systems bonds where the long-term results through 2017 will total more than $61.5 million in savings, or almost $12 million annually beginning in 2013. Current year savings will be nearly $1 million.

Source: Phoenix Business Journal

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