Philadelphia plans to sell $218 million of general obligation bonds in June or July, Philadelphia Treasurer Nancy Winkler told The Bond Buyer.
About six months later, the city plans to sell $200 million for a police headquarters and morgue, she said.
The city plans to sell a total of $578.2 million in new GO bonds from fiscal year 2014 through fiscal year 2019, according to Philadelphia's five-year financial and strategic plan. The city's GO bonds are rated A-minus by Fitch Ratings, A2 by Moody's Investors Service, and BBB-plus by Standard & Poor's.
The city plans to spend nearly $10 billion over this same six year period on capital needs. Much of this will be financed by revenue bonds and already approved bonds and loans that have not been initiated. Some of the money will also come from loans from the Pennsylvania Intergovernmental Cooperation Authority.
The Pennsylvania constitution limits Philadelphia's total debt capacity to 13.5% of the 10-year average of the annual assessed valuation of the city's taxable real estate.
The city is currently undergoing a comprehensive property revaluation that is expected to raise the total assessed value to $98.6 billion in fiscal year 2014 from $12.2 billion in the current fiscal year.
As of July 1 the city is expected to have remaining debt capacity of $102 million. It is also able to issue bonds based on authorized but unissued debt from past fiscal years.
With the increase in valuation, the constitutional debt limit will increase. However, "the city's ratio of debt service to total expenses will continue to restrict its ability to issue general obligation debt," according to the city's "Five-Year Financial and Strategic Plan FY14-FY18." "A relatively high ratio of debt service to obligations will not only crowd out other operating expenditures, but if the ratio gets too high, it could also result in a reduction of the city's bond rating, thereby increasing the cost of borrowing."