Buffalo, NY—( release ) City Comptroller Andrew A. SanFilippo announced the sale of $23,975,000 in Water System Revenue Bonds, which will fund improvements and repairs to the City’s aging water system. The bonds were sold through the Buffalo Municipal Water Finance Authority.
The proceeds of the bonds will be used to pay for improvements to pumping stations and for various operating efficiencies as the first year component of a five-year capital improvement plan.
“We are very pleased to make this announcement, because this bond sale will facilitate necessary infrastructure improvements and maintenance. We were also able to take advantage of the Build America Bond program of the Federal Stimulus Act,” Comptroller SanFilippo said.
For all the bonds (aggregating $21,050,000) that mature after 2016, the City, through issuance by the Authority, was able to achieve considerable savings by utilizing taxable Build America Bonds, for which the Federal Government will pay 35% interest rate subsidy.
“This Federal assistance expanded the buyer base for our bonds and lowered the net cost of these capital improvements for the citizens of Buffalo. This part of the Federal Stimulus Program, formally known as the Federal American Reinvestment and Recovery Act of 2009, has been enormously successful, and we decided to take full advantage of the federal support," the Comptroller said.
“This is also a perfect example of why it is so important for the City and its financing authorities to achieve excellent ratings from the rating agencies,” SanFilippo said.
“A higher bond rating translates into lower borrowing costs for capital improvements that are critical to maintaining the City’s water system. As a result, the burden on the rate-paying customers is significantly reduced,” he added.
SanFilippo said the lower borrowing costs were attributable to a low interest rate environment, the Water Authority’s “A” bond rating, and the strategic use of the federal stimulus “Build America Bonds” structure.
The Water Finance Authority was activated in 1992 and was authorized to issue bonds for capital improvements and other water system needs in the City. The Buffalo Water Board, which was activated in the same year as an administrative body, is authorized to set and collect rates, fees, rents and other service charges to pay for the costs of operating the City’s Water System. The Common Council recently approved Veolia Water as the City’s new water system management company. American Water Services had managed the water system for the previous thirteen years.
The Authority anticipates selling additional bonds for other improvements to the City's water system over the next several years