Yonkers, New York, has taken the first step in its $523 million school modernization initiative.
The city’s Industrial Development Agency sold $25 million of school facility revenue bonds on Aug. 31 with Roosevelt & Cross the book-running senior manager for the negotiated sale.
The state-supported bond issue marks the initial debt issuance for the Phase I plan, which consists of several projects under consideration by the Yonkers Schools Construction Board. Projected completion date is 2025.
Roosevelt & Cross generated $50.78 million of orders, and placed the bonds with 18 institutional investors. The deal generated an all-in true interest rate of 2.95%.
“We saw significant interest from institutional investors in this important offering,” said Roosevelt & Cross executive vice president Scott Monahan. “We expect additional success as the Phase I projects continue to come to the market for financing.”
The $523 million undertaking is part of a $2 billion “Rebuild Yonkers Schools” effort backing the new construction and infrastructure improvements to educational facilities in the 212,000-population Westchester County community just north of New York City.
S&P Global Ratings and Moody’s Investors Service rated the bonds AA and Aa3, respectively.
Moody’s said its enhanced rating also reflects New York State's Aa2 general obligation rating and positive outlook, given projected full funding of debt service from state aid — all state school aid can be used for debt service — and mechanics that require the state to pay the trustee directly.
“Coronavirus relief funds by the federal government have offset any possible declines in state aid in fiscal 2021 and 2022,” Moody’s said. “Given the districts heavy reliance on state aid, we do not expect any meaningful declines in state aid in the next three to five years.”
Projected full year state aid in 2021 and 2022 is projected at $276 million and $318 million, respectively. “These totals include some federal aid; however, almost all federal aid does pass through New York State and would be subject to withholding,” Moody’s added.
According to Mayor Mike Spano, the program aims to rebuild all 39 existing public schools and build three new ones over four phases and 13 years.
The state legislature passed the Yonkers City School District Joint Schools Construction and Modernization Act in 2016. The construction board, a byproduct of the bill, oversees the creation of new school facilities and modernization of existing school facilities.
Yonkers public schools average 75 years by age with many as old as 100.
Academy Securities, Loop Capital Markets and Siebert Williams Shank & Co. LLC were co-managers for the bond sale. Capital Markets Advisors was the financial advisor. Harris Beach was bond counsel.
