ARIZONA DAILY STAR: Sun., Feb. 15, 2009

Taxpayers lost big on Rio Nuevo bond sale

By Rob O’Dell

By not delaying it, as other US areas did, city may have to pay extra $10M or more.

When other communities across the country were pulling out of the bond market in December as the failing economy pushed interest rates higher, Tucson forged ahead with a Rio Nuevo bond issue. The move potentially cost taxpayers more than $10 million in extra interest — money that could have gone into projects instead — because the municipal bond market recovered in January and February, experts interviewed by the Arizona Daily Star said.

One municipal bond expert put the potential loss at as much as $18 million.

The city's bond adviser, Shawn Dralle of RBC Capital Markets, estimated the savings from delaying the bond sale would have been a much smaller $5.4 million over the life of the bonds, from 2011 to 2025.

Tucson issued $78 million in bonds for its Downtown redevelopment district Dec. 15-17, as state lawmakers were openly threatening to take back the state sales taxes that go to Rio Nuevo because of the project's perceived lack of progress.

Contact reporter Rob O'Dell at 573-4346 or rodell@azstarnet.com .