Virginia Beach Refinancing Saves Taxpayers $8.3 Million Over 15 Years

Tuesday, January 02, 2018

Virginia Beach, VA ­– Jan. 2, 2018 - The City of Virginia Beach has saved taxpayers $8.3 million by refinancing some of its outstanding Series 201 IA and 2012A General Obligation Public Improvement (GOPI) bonds – loans that funded various roads, schools and other capital projects. The city's outstanding AAA bond ratings helped make the savings possible.

Because the tax-exempt market has been volatile over the last few weeks with rates increasing and decreasing on any given day, and in anticipation of not being able to advance refund bonds on a tax-exempt basis after Dec. 31, 2017, many issuers, including the City, started gearing up to execute advance refundings before the end of the year to lock in debt service savings.

On Dec. 12, 2017, the Virginia Beach City Council authorized a General Obligation Public Improvement (GOPI) refunding bond sale with a maximum principal amount of $85 million to refund a portion of the City's outstanding Series 201 IA and 2012A GOPI bonds. On Dec. 19, the City sold $71.53 million refunding GOPI bonds. The refunding resulted in debt service savings of $8.3 million over 15 years, and on a present value basis resulted in $6.8 million savings, or 8.7 percent of the refunded bonds.

Seven electronic bids from various bond agencies were received on the refunding GOPI bonds. The bonds were awarded to Goldman Sachs & Co., LLC at a true interest cost of 2.300538 percent. 

"The City works hard to maintain our perfect AAA bond ratings," stated Patricia A. Phillips, director of finance. This helps us take advantage of savings opportunities, thereby being good stewards of our citizens' money."

All three major rating agencies affirmed the City's triple-A rating with stable outlooks and were highly complimentary of the City's financial management strength:

  • Moody's Investors Service: Moody's reports a history of "strong" financial management.
  • Standard & Poor's:  S&P characterizes the City's management conditions as "very strong," with strong financial policies and practices.
  • Fitch Ratings: In the key rating drivers, Fitch describes financial management as "sound" with strong budget flexibility.

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