City of Sacramento sells $299 million in short-term bonds to fund City’s contribution to arena; long awaited
Today the City sold $299 million in bonds to fund its contribution to the construction of the Golden 1 Center in Downtown Sacramento. The amount will be put toward the City’s $255 million share of the Golden 1 Center, nine months after the City and Sacramento Kings broke ground on the new $507 million downtown arena. The center is expected to open in October 2016.
“Six years ago, we set out to accomplish what many thought would be an impossible task at an impossible moment: to finance a new arena with no new taxes and no net impact to our general fund. Against all odds, and in the face of endless obstacles, we prevailed, said Mayor Kevin Johnson.
“Six years later, we reach a profound milestone. One that not only solidifies what I’m confident will soon become a national model of public-private partnership, but that also sends a powerful statement that Sacramento is ready, willing and able to invest in ourselves and our future. It’s a proud moment among many, many more to come.”
“We congratulate our partners at the City for achieving the next milestone in our journey to deliver a world class sports and entertainment venue that will transform the Sacramento region, said President of the Sacramento Kings Chris Granger.
“There’s tremendous momentum occurring throughout the urban core, and the new bond rating sends another strong signal that it’s time to invest in Sacramento.”
The cash has been received by the trustee bank, as of this morning, for the project and is available to fund on-going project construction expenses agreements between the City and the Kings. With two credit ratings being A and A+, the overall interest rate for the short-term debt is 2.47 percent. The excellent credit ratings were based upon the City of Sacramento’s strong management, solid and improving budget, and local economy.
“The solid credit ratings and a debt finance plan which does not put the General Fund at risk have enabled us to secure the low-cost short-term financing and will prove advantageous when the long-term bonds are sold next month,” stated City Treasurer Russ Fehr.
Under an agreement reached in July 2014, the Goldman Sachs investment bank has purchased the entire bond issue. The $299 million amount sold includes funds for debt reserves, interest expense during construction, and costs of issuing the debt.
Today’s sale is the first of two bond sales. It is the City’s intent to convert the short-term bonds to long-term (35-year) fixed rate bonds in early September to take advantage of the current low interest rates.