City of Upper Arlington and Baird Announce $18M Bond Offering

City’s Top Credit Rating Allows It to Issue Build America Bonds at Lower Cost

The City of Upper Arlington and Baird today announced an $18 million bond offering, the proceeds of which will be used to both refinance existing debt and pay for local capital improvements. $7 million of the City’s offering is in Build America Bonds (BABs) provided under the American Recovery and Reinvestment Act of 2009. Such bonds benefit from an interest rate subsidy that lowers the actual interest cost on the bonds. The offering is the first in Ohio to use general obligation Build America Bonds since the stimulus plan was enacted in February.

Baird, an employee-owned, international wealth management, capital markets, private equity and asset management firm, served as the underwriter on the transaction. Bricker & Eckler LLP served as bond counsel.

$10 million of the offering will be used for capital improvement projects, such as the reconstruction of Arlington Avenue, Wickliffe and Coventry roads, and waterline replacements at Collingswood Road and Crafton Park. By issuing the Build America Bonds, the City’s effective interest rate is 3.46% instead of a typical 4.02% rate that traditional bonds currently carry. Over the life of the bonds, which have a maturity of 20 years, the City will save approximately $600,000.

“We were able to take advantage of the best options available to us for this bond issuance because we were prepared,” said the City’s Finance Director Cathe Armstrong. “Our financial forecasts and debt policies relative to our Seven-Year Capital Improvements Program combined with two triple A financial ratings and the excellent support of our financial advisors put us in a unique position to maximize our result.”

According to both Moody’s Investors Service and Standard & Poor’s, the City of Upper Arlington currently has an Aaa/AAA credit rating, the highest possible rating provided to investors. Because of the City’s excellent ratings, the market demand for the bond offered was extremely strong.

“Baird is pleased to help the City of Upper Arlington with this transaction and access cheaper financing through Build America Bonds,” said David Conley, Managing Director and lead banker on the deal. “The offering will allow the City to move forward with its needed capital improvements at a much lower cost to taxpayers.”

Financial Advisor to the City, John Payne, Principal of Bradley Payne LLC, added, “The rating agencies confirmed the City’s exclusive triple A ratings. Officials saved over $600,000 of interest expense by using the newly-created BABs for a portion of the new money borrowing, and they saved additional dollars from a series of traditional, tax-exempt refundings. The transaction was innovative and highly efficient. Everyone was very pleased.”

Under the American Recovery and Reinvestment Act of 2009, states and local governments are eligible to issue BABs, through 2010, for capital projects. When issuing BABs the lender receives a subsidy from the federal government equal to 35% of the interest due on the BABs. In many cases, this subsidy offsets in a lower cost to the lender, thereby reducing its overall borrowing costs.

About the City of Upper Arlington
The City of Upper Arlington is a first-ring, primarily residential suburb of Columbus, Ohio. Approximately 90 years old and just under 10 square miles in size, Upper Arlington is home to more than 33,000 residents, with multiple generations of the same family to be found in close proximity to each other. They value its strong sense of tradition and community, excellent school system, beautiful neighborhoods with mature street trees, and the many exceptional safety and City services that are provided. Thanks to the strong leadership and vision of current and past City Councils, combined with a professional administration that strives to achieve the highest standards in all it does, Upper Arlington is a leader in providing its citizens unparalleled quality of life while guided by financial policies that assure the community’s health and vibrancy over the long term.

About Baird
Baird is an employee-owned, international wealth management, capital markets, private equity and asset management firm with offices in the United States, Europe and Asia. Established in 1919, Baird has more than 2,400 associates serving the needs of individual, corporate, institutional and municipal clients. Baird oversees and manages client assets of more than $66 billion. Committed to being a great place to work, Baird ranked number 14 on the FORTUNE’s “100 Best Companies to Work For” in 2009 -- its sixth consecutive year on the list. Baird’s principal operating subsidiaries are Robert W. Baird & Co. in the United States and Robert W. Baird Group Ltd. in Europe. Baird also has an operating subsidiary in Asia supporting Baird’s private equity operations. For more information, please visit Baird’s Web site at www.rwbaird.com.