CHICAGO — Cincinnati today will take institutional orders on $70 million of general obligation, unlimited-tax debt that is part of the city’s regular borrowing to finance capital projects.

The borrowing is divided into six series of new-money bonds and a $13 million refunding.

The new money includes $22.7 million of taxable GO Build America Bonds, $11 million of GO recovery zone economic development bonds, and $8.7 million of taxable GO BABs that feature an additional municipal income tax pledge.

The remaining tranches include $7.5 million of tax-exempt GOs, $1.2 million of tax-exempt GOs that also feature an additional municipal income tax pledge, and $5 million of taxable GOs.

Of the city’s 2.1% income tax, 0.15% is set aside solely for capital projects. It is that portion of the tax that will supply the additional revenue source that is being pledged towards repayment of some of the debt, said Kathleen Creager, the city’s assistant director of finance.

An additional $13.3 million issue will be used to advance refund a piece of the city’s outstanding debt.

“It’s pretty complicated, but I assure you it’s the minimum number of series associated with the purposes and tax statuses,” said Bethany Pugh of Public Financial Management Inc., the city’s financial adviser.

Stifel, Nicolaus & Co. is lead manager on the deal. Fifth Third Securities Inc. and Rice Financial Products Co. round out the underwriting team. Peck, Shaffer & Williams LLP is bond counsel.

After the sale, Cincinnati’s outstanding GO debt will total $459.1 million. The city has another $80.1 million of economic development non-tax debt.

Moody’s Investors Service rated the bonds Aa1 with a stable outlook. The agency in March had revised its outlook to negative due to declining income tax revenue, which makes up nearly two-thirds of the city’s general fund. But the outlook is back to stable after Moody’s recalibrated its municipal ratings to a global scale.

Standard & Poor’s rates the GO debt AA-plus with a stable outlook.

The borrowing comes as Cincinnati faces a $51 million deficit tied mostly to the income tax declines.

Like many Ohio cities, Cincinnati’s fiscal position has been weakened over the past few years due to its reliance on income taxes, an economically volatile revenue source. The City Council in September will begin budget deliberations that will need to erase the projected $51 million shortfall.

Despite falling revenue, analysts said the city is bolstered by strong fiscal management and its ability to raise property taxes without voter approval.

Analysts also praised Cincinnati’s conservative debt policy that has kept all of the city’s debt in a fixed-rate mode and free of interest-rate swaps. Just under 75% of its GO debt amortizes within 10 years.

In related news, Mayor Mark Mallory last week announced the city had won a $25 million federal grant for a long-planned streetcar line. The grant is part of the Department of Transportation’s $293 million of stimulus money for streetcar, trolley, and bus projects nationally.

The City Council in May approved a measure allowing the city to issue up to $64 million to finance the project. The local bonding authority was key to securing the federal funding, officials said.

The grant brings the total streetcar funding to $114.5 million and means the city will begin construction, the mayor’s office said in a release.

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