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FOR IMMEDIATE RELEASE November 17, 2006
Release No. M-117-06
CITY TREASURY DIVISION SAVES TAXPAYERS ALMOST $600,000
The Treasury Division of the City Department of Budget and Fiscal Services managed to glean a substantial amount of money by capitalizing on inefficiencies in the refunding escrow from a 2004 bond issue.
The savings on the general obligation bonds Series 2004 ABC amounted to $594,950, said Edlyn Taniguchi, Chief of Treasury.
Mayor Mufi Hannemann praised the move, saying, “This kind of initiative is exemplary. Edlyn and her staff were already hard at work processing thousands of new applications for tax exemptions. They could have easily turned away from this opportunity to save taxpayer dollars, and no one would have noticed. Instead, they took on this complex transaction, to the benefit of the entire City.”
Taniguchi said, “The yield on the escrows for advance refunded bonds is restricted to the yield on the bonds themselves. Consequently, some of the securities used to fund the escrow mature prior to the payment date for the debt service and the cash sits idle in the account, which does not earn interest. By executing this transaction, the City was able to sell the use of that idle cash to increase the efficiency within the escrow and earn substantial revenue.”
She said the move was recommended by UBS, the financial firm that underwrote that bond issue for
She said that kind of follow-up by UBS is a benefit of having a firm underwrite Honolulu’s bonds regularly, through negotiated sales. Taniguchi said that expertise and support would not be available if the City were to switch to competitive bond sales, as some have advocated.
Edlyn Taniguchi, Chief of Treasury, 527-5673
Mark Matsunaga, 527-5767
|Friday, November 17, 2006|