The city of Winston- Salem concluded a $10.5 million bond sale on June 15 to improve local sidewalks, streets and housing facilities. The sale comprised $1.8 million in general obligation bonds and $8.7 million in Recovery Zone Economic Development Bonds (RZEDBs). RZEDBs are federally subsidized and carry lower-than-normal financing costs.
Using RZEDBs rather than traditional tax-exempt bonds will save the city approximately $2,366,051 in net debt service over 22 years, said Chief Financial Officer Denise Bell.
“By accessing this lower-cost financing provided under the federal stimulus bill we’re able to move forward with capital improvement projects that will enhance our community,” Bell said.
The general obligation bonds have a maturity of three to six years. The RZEDBs have a maturity of six to 22 years. Both bonds are rated Aaa, AAA and AAA by Moody’s, S&P and Fitch, respectively.
Robert W. Baird & Co., a private equity and asset management firm, served as the underwriter on the transaction. Parker Poe Adams & Bernstein LLP served as bond counsel.
Under the American Recovery and Reinvestment Act of 2009, certain municipal issuers are eligible to issue RZEDBs through 2010 for improvements within a “recovery zone.” The recovery zone designation is determined by the governing body and is based on findings of significant poverty, unemployment, rate of home foreclosures or general distress. The federal government subsidizes 45 percent of the interest cost of RZEDBs.