City finance officials ask council committee to approve up to $350 million in refunding bonds

The Boston City Council Committee on Ways and Means on April 7 heard from city finance officials seeking authorization to issue refunding bonds in an amount not to exceed $350,000,000 to refinance existing general obligation debt.

City Chief Financial Officer Ashley Grafenberger told the committee, “we're here today requesting authorization of up to $350,000,000, to refinance some of our existing debt.” She and First Assistant Collector-Treasurer Jerica Bradley said the authorization would allow staff to combine a refunding with a planned general obligation bond sale in mid-May to reduce issuance costs.

Grafenberger said the city looks for refunding opportunities when net present-value savings are attractive; she described a typical target as “greater than 3%.” The officials said the $350 million would be added to $200 million of existing authorization, giving a combined authorization of $550 million, and that about $360 million to $368 million of outstanding debt is currently callable and eligible for refunding. Grafenberger said the total outstanding general obligation debt was “about 1.3 [billion],” and that annual debt service in fiscal 2025 was $276,000,000.

The CFO and Treasury staff cited the city’s most recent refunding in December 2020 as an example: that refunding reissued $91.5 million and produced $10.5 million in debt-service savings through 2034 (about $850,000 a year). Financial advisers’ modeling in March produced roughly $10,000,000 in potential present-value savings for the pool of eligible refundings, the administration told the committee, while noting market conditions could change that estimate.

Committee members asked about mechanics, timing and credit effects. Jurisdiction leaders were told the refunding would be sold to investors in a market-driven competitive process that the city manages with financial advisers; proceeds from any new sale would be used to pay off the older, higher-cost debt. Grafenberger said the administration could decline to proceed if market conditions were not favorable. On credit rating effects, she said refinancing that reduces debt-service costs would generally be neutral or positive, but offered no firm prediction.

Several councilors asked about amortization and the city’s debt policy; the administration said the city has followed a practice of relatively rapid payoff and intends to maintain its 20-year amortization and debt-management policies. Officials said refundings are timed so the city avoids paying issuance costs twice by aligning refundings with planned new-money bond sales.

The committee hearing was a request for authorization and did not record a formal vote on the docket. The administration said it will report back after it goes to market with the final amounts, actual interest rates and the estimated savings from any completed refunding.

Ending: The committee took testimony and questions from councilors and heard that the administration plans to return with final results after market sale; no formal council vote was recorded at the hearing.