Hawaii Reporter Question: I understand from speaking with council members that the city administration is asking the council for permission to float $2 billion in bonds to pay for the initial rail contracts.  Could you please confirm the timing on this request?

City & County of Honolulu Answer:  To date, General Obligation Bonds (G.O. Bonds) have been authorized by the City Council in the amount of $1,975,808, as appropriated in the respective capital budgets for the Honolulu High-Capacity Transit Corridor Project (the Project), see below.

  • FY2010 – Ordinances 09-12 and 09-13                 $   917,317,000
  • FY2011 – Ordinances 10-12 and 10-13                   1,056,491,000
  • Total Authorized                                                 $1,975,808,000

Requested in current year

  • FY2012 – Billl 34 (2011) and Bill 15, CD1 (2011)      104,736,280
  • Total – Authorized and Requested                       $2,080,544,280

Hawaii Reporter Question: How soon are you going before the council, who is asking for the funds, and what will the money specifically be used for?

City & County of Honolulu Answer:   It is anticipated that a resolution authorizing the issuance and sale of G.O. Bonds for a portion of the appropriated and authorized amounts above will be submitted to the City Council during the fiscal year 2013 by the Department of Budget and Fiscal Services (BFS) at the request of the Transit Authority.

The G.O. Bond proceeds will be used for purposes defined in the capital budget ordinances.

$917,317,000                 FY2010 – Ordinance 09-12

Honolulu High-Capacity Transit Project:  Plan, design, construct, inspect, relocate, acquire land and equipment for the Locally Preferred Alternative

$1,056,491,000  FY2011 – Ordinance 10-12

Honolulu High-Capacity Transit Project: Plan, design, construct, inspect, relocate, acquire land and equipment for the Locally Preferred Alternative

$104,736,280                 FY2012 – Bill 34 (2011) – Requested

Honolulu High-Capacity Transit Project: Plan, design, construct, inspect, relocate, acquire land and equipment for the Locally Preferred Alternative

Hawaii Reporter Question: What is the city’s debt service (I understand it is 20 percent) and how much will this increase the budget’s ratio for debt service?

City & County of Honolulu Answer:  The 20% referred to in the question relates to citywide debt service, which includes G.O. Bond and Wastewater Revenue Bond debt service. However, the relevant debt service ratio is the G.O Bond debt service ratio.  For Fiscal Year 2012, the amount of debt service on G.O. Bonds is expected to be $269,764,000 or 13.9% of the operating budget.  That percentage is projected to increase to a high of 22.2% during the construction of the Project.

Hawaii Reporter Question: Who is going to market the bonds?

City & County of Honolulu Answer:  The firm or firms who will be marketing the bonds will be selected prior to the sale of the bonds.

Hawaii Reporter Question: How will they be repaid?

City & County of Honolulu Answer:  The debt service on any bond issued for the Project will be paid with the General Excise and Use Tax Surcharge (GET Surcharge).

Hawaii Reporter Question: Will this be done as a single issue or packaged into multiple issues?

 

City & County of Honolulu Answer:   The issuance of G.O. Bonds for the Project will not be done as a single issue nor will it be packaged into multiple issues.  G.O. Bonds for the Project will probably be a separate series within the City’s normal annual bond issue.

Hawaii Reporter Question: Are these 20-year bonds?

City & County of Honolulu Answer:   These bonds will not be 20-year bonds.  The final maturity on any bonds issued for the Project will not exceed the expiration date of the GET Surcharge.

Hawaii Reporter Question: What is the current bond rating of the city?

City & County of Honolulu Answer:  The City’s current bond ratings on its G.O. Bonds are Aa1 from Moody’s and AA+ from Fitch.

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