Columbus, Ohio readying $188 million refunding

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DALLAS -- Columbus, Ohio will hit the market next week with $188 million of its high-grade general obligation paper in a refunding expected to generate $10 million in savings.

Proceeds will refund debt sold in 2012 and 2013. H.J. Umbaugh & Associates is advising the city auditor's office on the transaction and Bricker & Eckler LLP is bond counsel. Bank of America Merrill Lynch is the underwriter.

The city is a regular issuer and in early October sold $317 million over three series of unlimited and limited tax notes and unlimited and limited tax bonds to fund various city projects relating to transportation, water and sanitary sewer projects.

Every three or four years, the city asks for -- and since 1985 has always won -- permission from voters to issue general obligation bonds. In November 2016, voters approved a $950 million bond package to resurface roads, install new water lines and complete other capital projects. Approximately half of the authorized debt is expected to be repaid by net revenues of the city's enterprises.

Voters last approved a similar bond package in 2013 for $842 million.

“Despite the additional borrowing, the city's direct debt burden is expected to remain level due to ongoing tax base growth and rapid amortization of already outstanding debt,” according to Moody’s Investors Service.

The city's outstanding debt will total $1.7 billion following the refunding.

Ahead of the sale, Moody’s, Fitch Ratings and S&P Global Ratings affirmed the state capital's triple-A ratings. The outlook from all three is stable.

Fitch said that the city’s capital improvement plans are sizable “but the debt burden is not expected to rise materially.”

Income taxes, which are the city’s primary source of revenue, 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 unlimited tax GO 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.

Mollie Petitti, a spokesperson for city auditor Hugh Dorrian, said the city had no plans of returning to market with another bond offering this year.

However city officials may be pondering a new soccer stadium in order to keep its Major League Soccer team.

Columbus Crew owner Anthony Precourt announced on Oct. 17 that he was looking into moving the club to Austin, Texas. Precourt said that MAPFRE stadium, which opened in 1999 as the first soccer-specific stadium in MLS, is no longer competitive with other league venues.

Columbus Mayor Andrew Ginther on Tuesday said he and other city leaders have scheduled a meeting with Precourt in the upcoming weeks to discuss ways of keeping the team in the city.

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Refunding bonds General obligation bonds City of Columbus, OH Ohio