City's Bonds Sell Like Hotcakes

Beverly Hills bonds are a fast sell in the financial market.

On July 28 the city offered a modest $62.5 million in both taxable and non-taxable bonds to fund several projects, including the ongoing construction of the parking structure at 455 N. Crescent Drive. The facility is part of the Annenberg Center for the Performing Arts and is being built on the site of the old post office.

"The good news is $62.5 million in bonds sold out in less than an hour," Dr. Scott Miller, the city's director of administrative services and CFO, told the City Council at its Tuesday meeting. "The brokerage firm we use ... said it was the fastest sale they ever had."

Bond sales last for two days, Miller explained. The first day bonds are sold to retail investors—citizens and brokers in Beverly Hills—and on the second day the bonds are made available to the general market. He said the city's bond issuance sold out in 51 minutes on the first day and that there were almost $200 million in orders.

Because of Beverly Hills' AAA rating, the city will save about $4 million in interest payments during the life of the bonds, which mature over 11-year and 30-year periods, Miller said.

As part of the sale, Miller said, the city sold about $32 million in Build America Bonds to fund the parking garage on North Crescent Drive. Build America Bonds are municipal debt instruments authorized under the Obama administration's 2009 stimulus program.

Unlike many municipal bonds, the income generated by Build America Bonds is subject to tax, but the federal government subsidizes 35 percent of the interest.