The San Jose Redevelopment Agency is assessing its options after it failed to find bidders in a competitive sale of $30.2 million of taxable tax allocation bonds.

The agency decided to test the competitive waters last week, as it saw liquidity improving in the market and an opportunity to price one of the first large competitive deals since Lehman Brothers Holdings Inc.’s mid-September bankruptcy.

The SJRA found bidders plentiful for the $70 million tax-exempt portion of the deal. It got three bids and increased the tax-exempt portion of the $80 million. Agency financial adviser Gary Kitahata, a principal at Kitahata & Co. in San Francisco, said the taxable deal failed because it was taxable, not because the agency tried to sell it competitively.

“Several [registered bidders] said that it wasn’t a question of competitive vs. negotiated sale, it was just the nature of the current market for taxable debt being volatile and uncertain,” he said.

Kitahata said the Redevelopment Agency is still considering its options for restructuring the deal in a way that may make it more palatable to investors in the current market. He said he hasn’t soured on the competitive market, noting that the agency saw a 12 basis point spread between its highest and lowest bids, suggesting that there is still a benefit to seeking competing bids on debt.

“We still intend to competitively sell another series of about $20 million in early December,” Kitahata said.

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