Columbus, Ohio skyline
The sale marks one of Columbus’s largest competitive GO sales in recent memory, said Megan Kilgore of financial advisor Umbaugh.

CHICAGO – Columbus, Ohio enters the market Thursday with $481 million of high-grade paper to fund capital projects as it prepares to go to voters this November for new bonding authority to keep pace with capital needs.

The deal offers five series of unlimited and limited tax notes and unlimited and limited tax bonds. Umbaugh is advising city auditor's office on the transaction and Bricker & Eckler LLP is bond counsel.

Proceeds will retire 2015 notes and finance public service, streets, highways, utility, public safety, health, water, sewer projects under a state consent agreement, and recreation and parks projects under an $866 million capital budget.

The city will ask voters this November to endorse a $950 million GO bond referendum. Its previous request for $842 million was approved in November 2013.

"Since 1956, the city has requested approval from its voters for ninety-two separate bond issues for various purposes, both enterprise and non-enterprise. The voters have given their approval to eighty-six of these requests, including every such request since 1985," the offering statement says.

The sale marks one the city's largest competitive GO sales in recent memory, said Megan Kilgore, who joined Umbaugh as a municipal advisor and principal last year after more than a decade working as assistant auditor managing city debt issuance in auditor Hugh Dorrian's office.

Ahead of the sale, all three rating agencies affirmed the state capital's top marks.

"The AAA GO rating reflects our assessment of the city's strong economy and budgetary performance and very strong management, budgetary flexibility, and liquidity," said S&P Global Ratings analyst Caroline West.

Moody's Investors Service said codified debt and financial policies partially offset a high debt burden and reliance on economically sensitive revenues while healthy financial operations continue to strengthen allowing the city to rebuild reserves tapped to deal with the last recession. High pension liabilities stemming from the city's participation in two statewide plans pose a strain.

The unlimited rating is supported by an ad valorem tax, without subject to rate or amount while the limited GO ad valorem pledge is subject to a 10-mill limit. The two carry the same rating as the state requires that cities use all revenues, including available property tax millage for the payment of debt service prior to any other uses.

Income taxes, which provide about three-quarters of city revenues, benefit from economic growth and an expanding employment base supported by Ohio State University, Nationwide Children's Hospital, and IBM Corp. The city dedicates a portion of the income tax to retire debt.

The city can raise property taxes if needed to cover ULTGO debt service and 8% of general fund expenses. Current property taxes represent only about 5% of general fund revenues and the city has long pledged to voters ahead of bonding referendums that it will use income taxes to repay debt.

"Although as a policy matter the city is unlikely to need to take this action, the ability to do so provides significant flexibility," Fitch said.

"The city has benefitted from some exciting economic development news lately. It's the fastest growing Midwestern city in both population and job growth, and it was a leader in startup activity last year. The proceeds of this sale will be used to provide for this continued growth," said Kilgore.

Columbus recently beat out dozens of other cities to win the U.S. Department of Transportation's Smart City Challenge. The $40 million grant will pay for innovative upgrades to the transportation network in Columbus. It will be boosted with $90 million of local public and private sector matching funds. The supporting contributions include $19 million from local governments and the rest from area businesses and organizations.

Efforts in the Smart City program will include converting more of Central Ohio Transit Authority's transit buses to compressed natural gas and buying additional electric cars and vehicles for the city's fleet. Innovative efforts include a fleet of autonomous vehicles that would pick up passengers at a bus terminal and take them to jobs and shops at a nearby retail center.

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