City of St. George utilizes outstanding credit rating to save $400,000 on G.O. Bond issuance

By David Cordero
[email protected]

The City of St. George recently closed on the first tranche of debt issuance for the voter-approved Trails, Parks and Recreation General Obligation Bond (G.O. Bond) with a true interest cost that was significantly lower than anticipated — saving the City and taxpayers approximately $400,000 in interest expense over the life of these bonds.

These savings are credited in large part to the city’s credit upgrade received from Standard & Poor which took the city’s rating frRWP24 8 - Copyom AA to AA+ — which also moved the needle on the City’s outstanding sales tax revenue bonds (from AA+ to AAA). These are the two highest credit ratings an organization can receive. The credit upgrades were attributed to the city’s very strong financial profile, strong financial policies and practices, and manageable debt profile in addition to the strength of the local economy.

“Without the long hours spent on planning, organizing and preparation by members of the City’s Budget and Finance Team — including City staff and elected officials — we would not have been in such a great position to save our taxpayers money,” said Mayor Michele Randall. “When the voters overwhelmingly approved the G.O. Bond back in November, it became our task to not only carry out the projects that the bond funded, but to do so in a way that is consistent with our conservative budgeting practices. We look forward to the construction of these wonderful projects that will enrich the lives of our residents for years to come.

The City received 13 competitive bids on the first tranche of debt issuance for the 2023 Parks, Trails and Recreation G.O. Bond. The successful bond sale grossed $15.2 million in funds with a true interest cost of 3.71%. After paying issuance costs the sale will net the city the funds needed for the first three years of G.O. Bond projects.

The true interest cost on the issuance was significantly lower than originally anticipated by the City's financial advisor last year as part of the G.O. bond process (4.07%). The lower interest rate is due to the city’s higher bond rating of AA+ on the G.O Bond issuance and timing on the market, both factors being better than originally forecasted. The lower interest rate will save taxpayers significant interest expense over the life of the bonds — approximately $400,000 less than originally estimated.