The first set of bonds to be repaid by Measure R sales tax receipts were sold last week, according to Metro CEO Art Leahy’s daily email to staff:
Last Thursday, we sold $732 million of Measure R bonds, made up of $574 million of taxable Build America Bonds and $158 million of tax exempt bonds. Proceeds of the bonds will provide $750 million, including bond premiums, for Measure R projects. Following extensive marketing, the AAA/Aa2 rated bonds were favorably received by investors as evidenced by the nearly 2x over subscription. Because of the 35% federal subsidy, the net interest cost for the entire bond issue is approximately 3.52% as compared to an estimated 4.24% had we sold the entire amount on a tax exempt basis.
Bonds are sold in order to obtain the money to build projects now and to offset the increased cost of building them later. The alternative is to wait until Measure R receipts flow into county coffers over time — but the key word there is ‘time.’ It can take many years for enough money to accumulate to build all of the projects Metro wants to build. Here’s the list.