DALLAS - Pima County, Ariz., will finance the next 12 to 24 months of its on-going five-year capital improvement program with proceeds from Tuesday's competitive sale of $100 million of general obligation bonds and $25 million of street and highway revenue bonds.

The proceeds will be used for dozens of county facilities and roads projects, said Michelle Campagne, a division director in the county's finance and administration department.

"This sale should get us through the next 12 to 14 months on our GO bond projects and maybe the next 24 months on the road bonds," she said. "We use the proceeds to reimburse the county for project expenses, so we try to have a bond sale every year to 18 months."

County supervisors also approved a sale of $75 million of sewer revenue bonds in December, along with the GO and highway bonds, but Campagne said the sewer bond sale is not scheduled until April.

"They are coming, but we wanted this sale to be the first out of the box," she said.

The county also expects to issue approximately $40 million of certificates of participation within the next six months.

Standard & Poor's has provided underlying ratings of AA for the highway revenue bonds and AA-minus for the county's GO debt. Moody's Investors Service rates the highway revenue bonds at A1 and the GO bonds at Aa3.

The county's financial adviser is RBC Capital Markets. Bond counsel is Squire, Sanders & Dempsey LLP.

Pima County has about a million residents, more than half of whom live in Tucson.

The $100 million of GO bonds includes authorization from elections in 1997, 2004, and 2006. With the sale, the county will have $378.8 million of authorized but unissued GO bonds from those elections.

The county's outstanding GO debt will total $390 million after the sale.

This highway bond sale is the sixth tranche the county has issued from $350 million of debt approved by voters in 1997. With the sale, the county will have $161 million in street and highway revenue debt outstanding, and $123 million of authorized but unissued highway debt remaining.

The street and highway bonds are supported by the county's share of fuel and vehicle taxes collected and distributed by the state.

Donald Spiece, director of Pima County's capital improvement program unit located in the public works department, said the county is wrapping up projects included in the 1997 authorization and is in the middle of the 2004 and 2006 projects.

Street projects financed with the bond proceeds involve mostly widening and extending existing roadways throughout the 9,200-square-mile county, he said.

"Most of the GO bond proceeds, more than $53 million, will be spent on building and renovating county facilities," Spiece said. "Other major categories include $12.3 million for parks and $6.9 million for flood control projects."

The CIP unit oversees the county's bond-financed projects, Spiece said.

"These bond sales are the primary funding source for the CIP projects," he said. "We are only a small group, only 10 people, but we have oversight of all the projects. We do the scheduling, prepare the reports, and orchestrate the projects with the appropriate departments."

Spiece said current project costs that are far higher than the estimates contained in the bond proposals, especially from 1997, have been a challenge.

"Like everyone else, we're finding that the cost of materials and labors have gone up significantly since these projects were put onto the books," Spiece said. "But we've been able to keep costs in line through re-engineering in some cases and reducing the scale and scope of the project in some others." q

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