TriMet's Use of Build America Bonds Saves $3 million
Transit Agency the Second Oregon Public Entity to Use the Program Championed by Senator Ron Wyden
Portland, OR - TriMet has become the second public entity in Oregon to take advantage of the new Build America Bonds program championed by Senator Ron Wyden. By using Build America Bonds on a portion of TriMet's recent $49.55 million bond issue, the transit district will save taxpayers nearly $3 million in interest costs over the term of the bonds.
"The goal of Build America Bonds is to create jobs, rebuild America's infrastructure, and save taxpayer money by offering public entities an advantageous interest rate," Wyden said. "TriMet realized the potential of these bonds and joined what I hope is a long list of cities, counties, school districts and others in Oregon to take advantage of this program and start getting people back to work."
TriMet's bond proceeds will be used to fund various capital investments, including additional bus purchases, investment in a new dispatch and automatic vehicle location system for TriMet's fleet.
"TriMet is pleased to be able to provide savings to our taxpayers," said TriMet General Manager Fred Hansen. "We were able to use Build America Bonds for a portion of our borrowing and produce significant savings."
In August, Dayton School District became the first public entity in Oregon to use Build America Bonds. The school district employed up to 150 people building and remodeling classroom and saved taxpayers an estimated $1.2 million in interest costs on a general obligation bond sale of $11.2 million.
The Build American Bonds program was introduced as legislation by Wyden in February 2005. Earlier this year it was included in the American Recovery and Reinvestment Act. In June, Wyden announced that 29 Oregon counties and four cities would be able to issue more than $103 million in the "Recovery Zone Economic Development Build America Bonds" program to finance projects at a lower borrowing cost.
Since the first BABs transaction in April, issuers nationwide have sold over $40 billion of BABs at effective yields lower than they could achieve in the tax-exempt market. Unlike traditional municipal bonds, which pay interest which is exempt from federal taxes, Build America Bonds pay a taxable interest rate to investors. However, the federal government provides an interest subsidy to issuers such as TriMet which results in an all-in lower cost to the borrower and thus to taxpayers.
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