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Committee endorses amended authorization to issue refunding general obligation bonds up to $1.356 billion
Summary
The committee recommended limiting an authorization to issue refunding general obligation bonds (up to $1,355,991,219) to a five-year window after staff projected that refunding opportunities could yield roughly $36 million in net present value savings on targeted series; a public speaker urged greater public notice for large debt actions.
The Budget and Finance Committee recommended approval of an amended resolution authorizing issuance, from time to time and in one or more series, of refunding general obligation bonds not to exceed $1,355,991,219, while incorporating a budget-analyst amendment to limit the authorization window to five years.
Nadia Sisay of the Comptroller's Office of Public Finance explained the authorization would allow the city flexibility to access capital markets when conditions are favorable. Sisay said staff expect to achieve roughly 3.5% net-present-value savings in the aggregate and described an example in which, with a true interest cost (TIC) of 2.7%, the city could refund approximately $411 million with NPV savings equal to about $36 million.
The budget analyst recommended amending the resolution to limit the period of authorization to five years rather than leaving it open-ended; he reiterated projected savings of about $36 million in NPV. During public comment, Douglas Yip urged more publicity for large debt items and warned against using refinancing savings for politically driven spending. Chair Carmen Chu clarified for the public that the authorization would not create new debt but would provide refinancing authority for existing obligations and could save the city money if undertaken.
A motion to accept the analyst's recommendation was moved by Supervisor Mercurini and seconded by Supervisor Jane Kim; the committee agreed without objection to send the amended item forward with recommendation.
