SAN FRANCISCO -San Francisco Mayor Gavin Newsom yesterday introduced a measure calling for $887.4 million of general obligation bonds to rebuild San Francisco General Hospital, and the Board of Supervisors approved $718 million of revenue bonds for San Francisco International Airport.
The hospital bonds will go before voters in November if the supervisors approve the project, which is likely. The board already approved an initial $25 million in funds for planning the project. The San Francisco Department of Public Health says the 93-year-old public hospital does not meet current earthquake safety standards. If it's not replaced, the hospital - and the city's only Level 1 trauma center - would have to close in 2013.
"We have to do it," said Nadia Sesay, director of the mayor's office of public finance. "The beauty of it is that we've already done the planning work that will allow us to go to voters with a very accurate, honest estimate of the costs."
The bonds must be approved by two-thirds of city voters.
Sesay said the city would be able to build the hospital without raising property taxes above 2006 levels because other debt is maturing. She said the city would sell the debt in five issues between 2009 and 2013. Officials hope to begin construction in 2010 and complete the new hospital in 2015.
San Francisco will be in the market next Tuesday with an unrelated $274 million GO refunding issue. The bonds will be sold competitively. The deal includes $234 million of tax-exempt debt and $40 million of taxable bonds.
The debt will be structured as serials maturing through 2021. The city expects to achieve a net-present-value savings of 5.1%, or $21.8 million.
San Francisco's GOs are rated AA by Standard & Poor's, Aa3 by Moody's Investors Service, and AA-minus by Fitch Ratings.
The Board of Supervisors approved $718 million of airport revenue bonds Tuesday afternoon. The airport has been in the market almost constantly this year, as it refunded more than $1 billion of variable-rate demand obligations insured by XL Capital Assurance Inc. and auction-rate securities.
The $718 million will be the first new-money bonds the airport has issued in more than eight years, said Kevin Kone, assistant deputy airport director for capital finance. The airport plans to begin selling the bonds early next year.
The new debt will finance the airport's five-year capital plan. The biggest single project is the renovation of the airport's old international Terminal 2. The airport plans to spend $383 million to rebuild it as a domestic terminal.
The underlying ratings for the airport's revenue bonds are A1 from Moody's and A from both Standard & Poor's and Fitch.
The airport will sell the last of its variable-rate restructuring bonds in an $87 million VDRO deal Monday. Kone said the airport has fixed some of its unhedged variable-rate debt, but it still aims to keep about 20% of its debt in variable-rate mode.
"It always makes sense to have some debt in the short end of the yield curve because of the lower rates," he said, citing a deal yesterday in which the airport achieved a rate of just 1.8% on VRDOs in a weekly mode.