Gilbert's credit rating reaps millions in interest savings at bonds sale

Gilbert Water Tower
The town of Gilbert will save more than $18 million in principal and interest after a successful sale of bonds for the Public Safety Training Facility. (Courtesy town of Gilbert)

The town of Gilbert will save more than $18 million in principal and interest after a successful sale of bonds for the Public Safety Training Facility. (Courtesy town of Gilbert)

Gilbert's latest bond issue to pay for the voter-approved Public Safety Training Facility came at a historic low interest rate, saving the town about $14.4 million in interest, officials said.

Along with financing that included a bond premium, the town will be paying out more than $18 million less than what it advertised in the voter information pamphlet for Public Safety Training Facility bond question—$98.95 million advertised in principal and interest for the bonds versus $80.9 million in what the actual principal and interest will be.

The auction drew 11 bidders, an unusually large number, according to town officials. The lowest rate was 2.14% from Robert W. Baird & Co. The pamphlet estimated interest at 4%.

The bond question passed in November 2018 with more than 65% of voters approving.

Town Manager Patrick Banger credited the town’s AAA bond ratings for attracting so many bidders and bringing in the low interest rate.


“Statutes require us to take a conservative approach to [presenting bond costs to voters], and we did, but the actual costs are significantly less than [presented],” Banger said. “That's due to our exceptional credit rating and just the fiscal responsibility and financial policies of the town.”

The town also refinanced the remaining portion of 2008 street bonds at a savings of about $800,000.

In an email to Town Council after the sale, which was conducted May 7, Banger called it a "great day in the market" and credited council direction to wait a year on selling the bonds with a $5.6 million savings on costs.

Council also had directed staff to not exceed the $0.9896 tax rate and set the levy to that number as assessed values grew within the town due to new development and appreciation. After voters approved the bond question, council approved an authorizing resolution that would also keep the rate at $0.9896 per $100 of assessed valuation.
By Tom Blodgett

Editor, Gilbert

Raised in Arizona, Tom Blodgett has spent more than 30 years in journalism in Arizona and joined Community Impact Newspaper in July 2018 to launch the Gilbert edition. He is a graduate of Arizona State University, where he served as an instructional professional in the Walter Cronkite School of Journalism and Mass Communication from 2005-19 and remains editorial adviser to The State Press, the university's independent student media outlet.