The Pittsburgh City Council is scheduled to vote Tuesday on a sale of $125 million in general obligation bonds. Officials say it’s the city’s largest bond ever, and the first new debt issued under Mayor Luke Ravenstahl.
The vote for $80 million of Series B new money and $45 million of Series A refunding bonds will come less than a week after Moody’s Investors Service and Standard & Poor’s revised their outlooks on Pittsburgh’s general obligation bonds to stable.
Both rating agencies cited the city’s improved pension funding levels.
Moody’s has an A1 rating for the city’s GO bonds, while Standard & Poor’s assigns a BBB. Fitch Ratings assigns an A with a stable outlook.
Pittsburgh boosted its public employee pension funding levels by allocating $736 million of parking tax revenue over 30 years as a new source of funding to boost its level from less than 50% to 62%.
Had the city remained below 50%, Pennsylvania’s Act 44 law, passed in 2009, would have required larger annual contributions by the city.
On Jan. 12, Ravenstahl, City Council President Darlene Harris and other city officials pitched the rating agencies for an upgrade during a visit to New York.
Ravenstahl, who took office in 2006, said in a statement that the upgrades would mean “significant” savings for city taxpayers.
Council members plan to earmark the money for new public safety vehicles and infrastructure upgrades.
The Intergovernmental Cooperation Authority, an oversight board created under the state’s Act 47 program for distressed communities, recently approved Pittsburgh’s 2012 budget and five-year plan, thus clearing the path for the bond sale. Pittsburgh applied for Act 47 status in 2003.
On Tuesday, the council will vote to create a pension trust fund. According to an ICA directive, the council must also create a board of city officials and residents to decide which capital projects will receive priority.
The bond proceeds would represent the first allocation under the new board’s oversight.