NYS Municipal Bond Bank Agency Approves $200 Million in Recovery Act Bonds for Six Local Governments

• by New York State Housing Finance Agency

NEW YORK, NY (11/16/2009)(readMedia)-- The board of the State of New York Municipal Bond Bank Agency (MBBA) today approved the sale of nearly $200 million in Recovery Act Bonds to help six local governments in New York State finance public improvements and stimulate their local economies.

The bond issue will consist primarily of Build America Bonds (BABs) and Recovery Zone Economic Development Bonds (RZEDBs), which were created by Congress in the American Recovery and Reinvestment Act (ARRA) of 2009.

"Pooling these financings into one bond issue will help local governments save money on their borrowing costs," said Priscilla Almodovar, MBBA President and Chief Executive Officer. "Our bond program will also help counties and municipalities finance much-needed capital improvements and generate economic activity. Our actions today promote Governor Paterson's recovery program to create jobs for all New Yorkers."

BABs and RZEDBs are taxable bonds that receive federal government subsidies for the life of the bonds. The subsidy consists of 35% of the interest payments for BABs and 45% for RZEDBs. There is no limit on the amount of BABs individual localities can issue. However, the federal government has issued specific allocations of RZEDBs to all counties as well as municipalities with populations above 100,000. RZEDB funds must be used in designated economic recovery zones.

The six localities expected to participate in the initial MBBA Recovery Act Bond issue are:

• Town of Brookhaven - $45.2 million
• Montgomery County - $8.78 million
• City of Rochester - $39.7 million
• City of Rochester schools - $60.18 million
• Saratoga County - $5.2 million
• Warren County - $23.15 million
• Wayne County - $10 million

Under the plan approved today, MBBA will issue Recovery Act Bonds and use the proceeds to purchase local bonds issued by the six local governments. The rates, terms and provisions of Recovery Act Bonds will mirror the rates, terms and provisions of the local bonds, which will be general obligation debt of the participating localities. The rating of the Recovery Act Bonds will be determined in large part by the credit rating of the localities issuing local bonds.

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The State of New York Municipal Bond Bank Agency was created in 1972 to provide municipalities with access to the capital markets for special programs.

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