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City of Kansas City, Mo.


City completes $89.175 million Sewer Revenue Bond Issuance

On the morning of Nov. 3, 2011, the City of Kansas City, Mo., successfully issued a total of $89.175 million in sewer revenue bonds. The bond proceeds plus $9.0 million in net premium provided $90 million in funding of improvements related to disinfection in connection with the City’s $2.5 billion overflow control program and for construction of new sewers in the First and Second Creek watersheds. The effective interest rate for the new money portion is 3.97 percent.

Simultaneously, the City refinanced a total of $7.53 million of outstanding sewer revenue debt, taking advantage of the current low interest rate environment. The refunding portion of the bond sale will help the City achieve debt service savings, on a present value basis, totaling over $1 million and just less than 17 percent of refunding principal. The refunding bonds, with an interest cost of 2.22 percent, replaced bonds that had interest rates averaging near 5.00 percent. The underlying credit ratings on the transaction were AA/Aa2 by Standard & Poor's and Moody's Investors Service, respectively.

"I am pleased with the efforts of staff and the underwriting team. The interest rate environment is such that we can fund these important sewer system improvements at a very low cost of funds," said Mayor Sly James.

The City used the negotiated method of sale with Morgan Stanley serving as senior manager of the underwriting team along with Oppenheimer & Co.; Piper Jaffray & Co.; Backstrom, McCarley, Berry & Company; and Valdes and Moreno. The underwriting syndicate solicited orders targeting both retail and institutional investors and coordinated closely with City staff and the City’s financial advisors to achieve the needed structure of the bond issue.

"With the number of large projects facing the Water Services Department in the future, I am pleased with the sale results as we seek to take advantage of any and all savings wherever they can be obtained," said Interim Director of Water Services Terry Leeds.

FirstSouthwest and Moody Reid Financial Advisors served the City on the transaction as co-financial advisers. Gilmore & Bell, P.C. and Martinez Madrigal & Machicao, LLC served as co-bond counsel. Disclosure counsel was handled by King Hershey, PC, Clayborn & Associates, LLC and Jane Hart Law Offices, LLC. Bryan Cave LLP served as counsel to the underwriters.

Media inquiries and other requests for more information about this issue should be directed to Tammy Queen, City Treasurer in the Finance Department, 816-513-1024.


City News Releases - 2011

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