$961,460,000 — Negotiated Sale
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$961,460,000 — Negotiated Sale
Two decades ago, D.C. was barely emerging from a fiscal crisis that had left the city almost bankrupt and taken over by a federal Control Board. But the last few years have seen explosive growth that has swelled D.C.’s coffers, so much so that for the first time the city has a full rainy-day fund to navigate any future challenges.
Today, Mayor Muriel Bowser and Chief Financial Officer Jeffrey DeWitt released the Fiscal Year 2019 Comprehensive Annual Financial Report (CAFR). The 2019 CAFR marks the District’s 23rd consecutive clean audit opinion and the fifth consecutive year of the audit finding no material weaknesses or significant deficiencies.
“In 2020, DC’s economy is stronger and more resilient than ever,” said Mayor Bowser. “A year ago, we were calculating the economic impacts of the longest federal government shutdown in our nation’s history. Today, we have 60 days of cash reserves, a AAA bond rating, and one of the strongest economies in the nation. And the historic strength of our economy is reflected in the historic investments we’re making across all eight wards – from more affordable housing, to new child care seats, to investments in keeping residents safe and reducing crime. We are proud of our city’s progress, grateful for the commitment of our taxpayers, and ready and eager to continue giving more Washingtonians a fair shot at pathways to the middle class.”
The U.S. Bureau of the Census estimates DC’s population on July 1, 2019 was 705,749, an increase of 4,202 (0.6%) from the revised estimate for 2018. 2019 was the 14th straight year of population growth. From 2005 to 2019 the city grew by 138,613, a remarkable gain of 24.4%. Also notable is that growth slowed in 2019, primarily due to decreases in net migration.
The District has a long-range capital financial plan to fund all capital asset needs and eliminate all deferred maintenance in less than ten years.
Questions have been raised about the District’s recently submitted FY2020 budget and financial plan and concerns have been voiced that the budget is not responsible and could result in the return of the Control Board.
As the independent Chief Financial Officer (CFO) of the District, I am required by federal law to certify that the budgets submitted by the Mayor to the Council, and ultimately to Congress, are balanced. In my March 20, 2019 letter, included in the proposed budget, I state, “that the FY2020 - FY2023 budget and financial plan is balanced.” I stand firmly by that statement.
With the federal government still eyeing another possible shutdown, it wouldn’t have seemed like a good time for the nation’s capital city to borrow nearly $1 billion in the bond market.
But if there was any concern among investors when the securities were offered early Wednesday, it didn’t register in the prices, despite how dependent its economy is on government spending.
When the District of Columbia sold almost $950 million in bonds, the difference between the yields it paid and top rated debt -- a key measure of risk -- were virtually unchanged from when it sold securities in July. Underwriter Bank of America Corp. set the yields on 10-year bonds at 2.35 percent, or 0.13 percentage point over AAA rated securities, according to data compiled by Bloomberg. In this summer’s sale, that gap was 0.14 percentage point.
The warm bond-market reception illustrates how much Washington’s finances have steadied since the 1990s, when Congress put a control board in place to balance its budgets. Its fortunes have since turned around significantly, thanks to increases in government spending, rising real estate values and an influx of residents. S&P Global Ratings, which gives its bonds the second-highest grade, says the city’s "economic and financial strength is at an all-time high."
Although the prospect of another partial government closure appears to have dwindled, with President Donald Trump saying Wednesday he doesn’t "want to see a shutdown," the bonds were marketed ahead of his comments.
On January 22, 2019, the Office of the Chief Financial Officer released a report estimating the impact of the federal government shutdown on the District of Columbia's revenues.
New U.S. Census Bureau Numbers Officially Put DC’s Population Over 700,000
Official Numbers Show that Washington, DC Has Gained Over 100,000 Residents in Eight Years
The District of Columbia has begun producing some of the most comprehensive and detailed infrastructure asset data in the business, and may influence the practices of other large frequent issuers.
On October 31, 2018, the Office of the Chief Financial Officer released its updated long-range capital financial plan report for the District of Columbia that includes capital asset replacement needs beyond the normal six-year capital planning period. This report defines and quantifies the challenges the District faces in funding its capital infrastructure needs, and presents the impact of recently enacted legislation that would allow the District to address these challenges over time. The report is intended to assist the Mayor, Council, agency directors, other policymakers and the public in understanding the size of the District's capital infrastructure needs, and how these needs might be addressed over time.
From the Washington Post Editorial Board:
From affordable housing to Metro to the occasional water-supply glitch, the District has its share of issues and problems. It is our job to hold the city accountable on those subjects but, just now, we’d like to focus on the bigger picture: The District is, broadly speaking, a reasonably well-run city. Proof of this comes from the Moody’s bond-rating agency, which in July elevated the city’s general-obligation debt to the highest possible level, AAA. This is not some sort of financial good-conduct medal, but a tangible reward that will enable the city to finance its activities at the lowest interest rates available, saving residents millions of dollars and freeing up resources to provide more and better services. It’s a win-win for both the public and the elected officials — past and present — who helped make it happen.
July 12, 2018 - Chief Financial Officer Jeffrey DeWitt announced today that Moody's Investor Service has upgraded the District of Columbia's General Obligation (GO) bond rating to Aaa. This provides the District with the highest possible credit rating for all outstanding General Obligation Bonds. In addition, the District's Tax Increment Financing bonds were upgraded to Aa2.
July 3, 2018 - Chief Financial Officer Jeffrey DeWitt announced today that Standard & Poor’s and Fitch bond
rating services have upgraded the District of Columbia's General Obligation (GO) bond rating
from AA to AA+. The rating increase affects $4.8 billion of outstanding GO bonds.
On May 25, 2018, an article in The Bond Buyer referenced a report released by Standard and Poor's earlier that month titled "Between a Budget and a Hard Place: The Risks of Deferring Maintenance for U.S. Infrastructure." In the report, S&P recognized the approach taken by the District (specifically the OCFO) towards better infrastructure maintenance planning, and how that approach could serve as a model for other state and local governments across the country. The article goes on to state that the rating agency recommended that other state and local governments follow the District of Columbia's approach to inventory, assess, prioritize and develop plans to fund deferred maintenance.