Build America Bonds Provide $64 Billion Nationally to Date;
Chicago Using $518 Million for School Construction and Renovation,
Saving Taxpayers $130 Million According to a Chicago Public Schools Estimate
CHICAGO – As part of the Obama Administration's efforts to highlight the local impact of economic stimulus programs, U.S. Treasurer Rosie Rios and Chicago Mayor Richard Daley today visited a public school construction site in Chicago supported by the Build America Bonds program. In conjunction with this event, Treasury also issued updated state-by-state data showing that the Build America Bonds program has provided $64 billion in low-cost borrowing to date for state and local governments across the country.
"With the Recovery Act's bond programs, the federal government has emerged as a strong partner in revitalizing state and local communities struggling with tight budgets," said Rios. "By providing much needed access to financing and low-cost borrowing, Build America Bonds have already helped hundreds of communities fund the development of schools, hospitals, and other public projects. These bonds give city and state governments the access to funds needed to jumpstart infrastructure projects that will create jobs, improve neighborhoods, and provide our children with the quality education they deserve."
A new financing tool created by the American Recovery and Reinvestment Act of 2009 (Recovery Act), Build America Bonds allow state and local governments to obtain much needed funding at lower borrowing costs. The Chicago Public Schools system (CPS) issued $518 million in Build America Bonds for the construction and improvement of the city's public schools system. Because of the strong demand for Build America Bonds and the federal government subsidy, CPS estimates it will save $130 million compared with issuing traditional tax-exempt debt. As a result of this funding, CPS has been able to finance renovation projects for existing schools and six new school construction projects.
Said Mayor Daley: "One of the most important tools we have had over the past year to stimulate our economy and help people get through these times is the federal economic stimulus plan -- the American Recovery and Reinvestment Act. But of all the funding the federal stimulus has given us, nothing is more important than the programs that support the Chicago Public Schools."
Through continued outreach efforts, Treasury aims to provide accessible forums for officials to learn how these bonds can be help in their communities. Last month, Treasury hosted webinars for local officials responsible for public financing plans, including state treasurers and municipal and county level officials. Treasury plans to continue its outreach effort to include mayors, transit authorities, and other groups that could benefit from issuing Build America Bonds.
Under the Build America Bonds program, the Treasury Department makes a direct payment to the state or local governmental issuer in an amount equal to 35 percent of the interest payment on the Build America Bonds. Between the program launch on April 3, 2009 and January 1, 2010:
· There have been $64 billion in Build America Bond issuances;
· Build America Bonds now constitute about 22 percent of the municipal bonds market; and
· There have been a total of 779 separate issues of Build American Bonds by local or state governments in 45 states.*
The Chicago area benefits from the following additional Build America Bonds issuances:
· $600 million for the Metropolitan Water Reclamation District;
· $84 million for the Cook County Community Consolidated School District; and
· $11 million for the Cook County Community College District.
In addition, Cook County has also received $131 million in allocations for Recovery Zone Economic Development Bonds. Targeted for areas particularly affected by job loss, these Recovery Zone Bonds provide a steeper federal subsidy of 45 percent of the bond interest.
* Source: Bloomberg data and Department of Treasury calculations