CHICAGO – Milwaukee takes competitive bids Thursday on $300 million of notes and bonds.
Ahead of the sale, rating agencies affirmed the city's short- and long-term bond ratings. Moody's Investors Service rates the city's $800 million of GO debt Aa3 with a stable outlook. Fitch Ratings and Standard & Poor's assign the city AA ratings and stable outlooks.
The deal includes $90 million of revenue anticipation notes, $128 million of general obligation promissory notes, $38 million of tax-exempt GOs, and $27.5 million of taxable GOs.
Proceeds will finance various projects, take out commercial paper and a line of credit, refund 2006 bonds, and provide cash flow help in anticipation of the city's $186 million take of state revenue sharing payments. The taxable tranche is primarily for tax-increment financing projects that could run afoul of the federal tax code's private use rules, said public debt specialist Richard Li of the city's comptroller's office.
The city, which is the largest in the state with a population of 600,000, will return to the market next month for the $39 million financing to support a new Milwaukee Bucks arena.
That deal will offer a rare double-tax exemption. Most Wisconsin in-state municipal bonds don't exempt interest from state income taxes, but the arena package offers the added boost.
The city's contribution will finance the development of a parking structure and convert existing space into a public plaza. The city's comes from tax-increment financing and a GO pledge will back the bonds. Comptroller Martin Matson's projections show the area TIF district generating sufficient revenue to repay any borrowing.
The public's share of the $524 million project cost is $250 million with the remainder coming from the team's current owners and previous owner, former Sen. Herb Kohl.
In addition to the city support, the Wisconsin Center District will borrow about $200 million leveraging future collections of taxes it now collects on hotel rooms, local food and beverages, and car rentals to repay convention center debt. The state's capital finance office is managing the transaction.
The Wisconsin Center District recently finalized a 30-year lease agreement paving the way for the planned borrowing to allow construction to begin this summer.
Public Financial Management Inc. is advising the city on both transactions. Katten Muchin Rosenman LLP and Hurtado Zimmerman SC are bond counsel. Chapman and Cutler LLP is bond counsel on the Bucks deal.
