Unprecedented failure in municipal bond auctions is causing municipal borrowers to flee the auction market and driving up rates at which cities can borrow money.
"California, Florida schools and the owner of John F. Kennedy International Airport joined a growing list of municipal borrowers exiting the U.S. auction-rate bond market as record failures push taxpayer costs higher."
"Thousands of auctions run by banks to set rates on the debt failed this month as investors shunned the securities and bankers refused to submit bids, sending interest costs to 10 percent or higher on some bonds. Auctions covering as much as $26 billion of bonds a day failed to attract enough buyers since Feb. 13, according to Bank of America Corp."
"Rates in the more than $300 billion auction market, where local governments, hospitals, museums, student-loan agencies and closed-end mutual funds borrow, are determined through a bidding process every seven, 28 or 35 days. Auctions fail when there aren't enough buyers. That's left bondholders who wanted to sell stuck with the securities and taxpayers or other backers of the debt such as fund holders with higher interest costs."
"Yesterday's 641 auctions of publicly offered bonds resulted in 395 failures, or 62 percent, according to data compiled by Bloomberg...Just 44 failures were recorded between 1984, when the market was created, and the end of last year."
"California, the biggest municipal borrower, plans to replace $1.25 billion of auction-rate bonds, debt manager Paul Rosenstiel said this week. New York City's Municipal Water Finance Authority yesterday said it will pay off auction debt by selling $684 million of variable-rate demand notes on March 18."
"Regulators are calling for more disclosure in the wake of the failures. The Municipal Securities Rulemaking Board, which makes rules for dealers in the municipal bond market, is considering rules that would force dealers to reveal the number of bidders and disclose how often auctions fail."
FULL STORY: Florida Schools, California Convert Auction-Rate Debt
Depopulation Patterns Get Weird
A recent ranking of “declining” cities heavily features some of the most expensive cities in the country — including New York City and a half-dozen in the San Francisco Bay Area.
California Exodus: Population Drops Below 39 Million
Never mind the 40 million that demographers predicted the Golden State would reach by 2018. The state's population dipped below 39 million to 38.965 million last July, according to Census data released in March, the lowest since 2015.
Chicago to Turn High-Rise Offices into Housing
Four commercial buildings in the Chicago Loop have been approved for redevelopment into housing in a bid to revitalize the city’s downtown post-pandemic.
New Park Opens in the Santa Clarita Valley
The City of Santa Clarita just celebrated the grand opening of its 38th park, the 10.5-acre Skyline Ranch Park.
U.S. Supreme Court: California's Impact Fees May Violate Takings Clause
A California property owner took El Dorado County to state court after paying a traffic impact fee he felt was exorbitant. He lost in trial court, appellate court, and the California Supreme Court denied review. Then the U.S. Supreme Court acted.
How Urban Form Impacts Housing Affordability
The way we design cities affects housing costs differently than you might think.
City of Costa Mesa
Licking County
Barrett Planning Group LLC
HUD's Office of Policy Development and Research
Mpact Transit + Community
HUD's Office of Policy Development and Research
City of Universal City TX
ULI Northwest Arkansas
Town of Zionsville
Urban Design for Planners 1: Software Tools
This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.
Planning for Universal Design
Learn the tools for implementing Universal Design in planning regulations.