►
From YouTube: Committee on Ways & Means on September 26, 2019
Description
Docket #1265
Message and order authorizing the issuance of tax-exempt refunding bonds in a principal amount not to exceed One Hundred Fifty Million Dollars ($150,000,000.00) in order to pay the principal, redemption premium, if any, and interest on the bonds or other obligations to be refunded, and other costs
A
B
Very
much
chairman,
as
you'd
mentioned,
we
come
with
a
request,
but
also
with
good
news.
Treasury
is
specifically
requesting
additional
or
a
funding
authorization
of
a
hundred
and
fifty
million
dollars
to
conduct
not
only
an
upcoming
anticipated
refunding
transaction,
but
also
to
provide
flexibility
for
future
of
funding
transactions.
If
we
feel
that
they
arise
and
we'd
like
to
enter
the
market
quickly.
B
As
the
councillors
certainly
know,
the
city
is
a
regular
issuer
of
long
term
debt
with
current
general
obligation,
debt
outstanding
in
the
amount
of
one
point:
three
four
billion
dollars
in
total
FY
2010
service
of
approximately
183
million
dollars,
as
you
may
also
know
from
time
to
time,
the
city,
like
the
vast
majority
of
municipal
issuers
in
the
marketplace,
engages
in
refunding
transactions.
These
are
transactions
in
which
new
bonds
are
issued
at
more
favorable
rates,
not
necessarily
to
fund
new
projects,
but
in
fact,
to
take
out
old
bonds
at
less
favorable
rates.
B
B
However,
due
to
the
passage
of
the
tax
reform
act,
this
practice
was
banned,
leaving
issuers
only
the
ability
to
issue
new
tax-exempt
bonds
to
take
out
old,
tax-exempt
bonds
once
those
older
bonds
had
already
met
or
passed
their
call
dates,
which
is
generally
eight
to
ten
years
after
original
issuance.
This
reform
has
significantly
limited
issuers
flexibility
and
is
required,
cities,
towns
and
states
to
employ
new,
a
new
creativity
and
generating
debt
service
savings
and
an
effort
to
save
taxpayer
dollars.
B
As
you'd
mentioned,
the
current
interest
rate
environment
has
presented
a
unique
opportunity
for
many
issuers.
This
presented
a
unique
opportunity
for
Boston,
also
as
you've
likely
heard.
Us
Treasury
securities
have
demonstrated
historically
low
rates.
With
the
current
7
and
10-year
Treasury
rates
dipping
below
well
below
the
equivalent
ten-year
averages
in
the
municipal
market.
This
has
presented
an
opportunity
to
again
employ
the
idea
of
an
advanced
refunding,
but
because
of
how
we
intend
to
cross
the
markets,
it
would
not
violate
the
previous
band
that
we'd
referenced
with
this
authorization.
B
The
city
intends
to
issue
approximately
83
million
dollars
in
taxable
bonds
to
take
out
approximately
79
million
dollars
in
older
tax-exempt
bonds.
While
rates
will
change
between
now
and
the
closing
if
executed
today,
the
net
effect
would
mean
over
six
million
dollars
in
budgetary
savings
spread
over
the
next
13
years,
with
nearly
50%
of
that
coming
in
the
next
five,
because
taxable
bonds
almost
always
carry
significantly
higher
rates
of
interest
than
tax-exempt
bonds.
This
opportunity
is
not
one,
that's
frequently
found.
B
B
B
A
great
question:
one
of
the
things
you
have
to
be
careful
of
refunding
transactions
are
credit
neutral.
If
anything
is
slightly
credit
positive,
because
you're
saving
on
debt
service,
you
have
to
be
careful
not
when
you're
refinancing
debt
not
to
issue
longer
dated
bonds,
then
the
current
bonds
outstanding,
because
then
you're
not
only
just
through
getting
savings,
you're,
actually
pushing
your
debt
further
out
right
and
that
could
be
viewed
as
a
credit
negative.
We
never
do
that.
We're
not
gonna,
be
doing
it
this
time,
we're
not
doing
it
from
a
programmatic
standpoint.
A
I
mean
you
have
my
full
confidence,
and
you
know
I
just
know
that
our
city's
in
really
good
hands
as
I
leave
this
chair
after
a
long
time
and
know
how
strong
the
city's
financial
position
is
in
its
due
to
the
great
work
of
the
mayor
and
all
of
his
cabinet
level.
People
and
look
forward
to
working
with
you
guys
still
for
over
the
next
three
months
and
I
will
be
reporting
the
self
favorably
next
week,
and
this
hearing
is
adjourned.